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Navios Maritime Acquisition Corporation Message Board

mikeyhorsehead 21 posts  |  Last Activity: Apr 23, 2015 7:05 AM Member since: Sep 8, 2012
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  • mikeyhorsehead mikeyhorsehead Apr 23, 2015 7:05 AM Flag

    Arris, Pace Topped Set-Top Box Market in 2014
    Combined For 25% of Global STB Revenues: Infonetics
    4/23/2015 6:30 AM Eastern

    By: Jeff Baumgartner
    Follow @thebauminator

    The proposed $2.1 billion merger of Arris and Pace will bring together the world’s two largest set-top makers, which together generated 25% of global revenues in the category for all of 2014, according to data from Infonetics Research.

    Arris, which acquired Motorola Home in April 2013, finished calendar year 2014 with 14% of overall set-top revenues ($2.7 billion), up 6% from the previous year, while Pace represented 11% of global set-top revenues ($2 billion), according to Infonetics data supplied to Multichannel News. Those numbers outpaced other suppliers in the sector such as Cisco Systems, Samsung, Humax, Technicolor, EchoStar, and ADB, among others.

    Arris was particularly strong in North America last year, holding 27% of revenue and 23% of unit shipments.

    Jeff Heynen, principal analyst for broadband access and pay TV at Infonetics, said the Arris/Pace deal is another indicator that the set-top box business (and broader consumer premises equipment market) “is all about scale,” noting that the total addressable market is not growing, save for regions such as China.

    But CPE still remains a “huge part of their revenue portfolio,” so consolidation, he said, will help Arris maintain its margin profile while also enabling it to grow its business outside of North America, where pay-TV sub growth is sluggish. Buying Pace will also give Arris a much larger presence in satellite TV, which is growing on a global basis.

    “Satellite was an area we’ve been homing in on,” Bob Stanzione, Arris’s chairman and CEO, said Wednesday during a call with analysts and reporters.

    Stanzione also agreed that achieving more scale was a key driver to a deal, calling it a “mutually sought transaction.”

    “We believe that, globally, customers are looking for suppliers that have the scale and ability to innovate and drive cost out of the business,” Stanzione said, adding that he believes the proposed deal will be “well received” by customers.

    Arris also shrugged off concerns that the deal could struggle to win regulatory approval because it will bring together the world’s two largest set-top box makers. He said STB market remains fiercely competitive.

    “We’re very confident that we will be able to have it approved…There are a lot of players in this business,” Stanzione said, noting that surge of new OTT entrants and TV-connected streaming devices.

    Though Arris and Pace hold significant STB share at Comcast, the world’s largest cable operator, Stanzione said the vendors don’t overlap much outside the U.S.

    “When you look outside the US, we are extremely complementary,” Mike Pulli, Pace CEO, said.

    Stanzione conceded that Arris and Pace do overlap in some product areas, but said the plan is to combine them quickly and accelerate development on new products much in the way Arris did following its acquisition of Motorola Home.

    The Arris/Pace deal is considered a “corporate inversion” whereby a company reincorporates overseas to reduce tax burdens. There was a crackdown on it last year to discourage it in certain situations.

    The resulting “New Arris,” to be 76% owned by Arris shareholders and 24% owned by Pace shareholders, will be a new holding company that will be incorporated in the U.K., while keeping its operational and worldwide headquarters based in Suwanee, Ga. Stanzione said the proposed deal is “well within the rules for an inversion,” noting that the rule is 20% minimal ownership, and that New Arris will be a “big taxpayer as a result of this [deal].”

    Don’t Forget About the Access Network

    Though the focus of the deal tends to center on the set-top implications, Heynen said it’s important not to underplay the access network side of it, pointing to Pace’s acquisition of Aurora Networks in 2013, and Aurora’s earlier purchase of Harmonic’s cable access unit, which included optical transmitters, amplifiers, receivers and nodes.

    Heynen said the merger with Pace puts Arris in a better position to drive the optical node market and give it access to more distributed forms of access technology that Aurora is also known for. That, he said, will help Arris keep pace as operators consider distributed forms of a Converged Cable Access Platform (versus the fully-integrated centralized form found in Arris’s flagship E6000 CCAP), and give Arris a larger share of the optical market in Europe.

  • Almost two years after sealing up $2.35 billion acquisition of Motorola Home, Arris is diving deeply into the M&A pool again via a $2.1 billion deal for U.K.-based Pace plc, a deal that will give Arris a dominant share of the set-top box market.

    Arris said the deal will accelerate its growth strategy and generate more scale, creating a behemoth with $8 billion in pro forma revenues, 8,500 combined employees, and an enhanced international presence. Both Arris and Pace are positioned well at Comcast, as they both supply devices for the MSO’s next-gen X1 platform. The acquisition is expected to be accretive to Arris non-GAAP earnings per share in the first 12 months after the deal is wrapped.

    Arris said the deal, involving a mixture of cash and stock, will result in the formation of “New Arris,” which will be incorporated in the U.K., and have its operational and worldwide headquarters based in Suwanee, Ga.. New Arris will trade on the NASDAQ under the “ARRS” ticker, they said. In connection with the formation of New Arris, each current share of Arris will be exchanged for one share in New Arris.

    Pace shareholders will receive approximately 48.2 million shares of New Arris in aggregate. On a pro forma basis, current Arris shareholders will hold about 76% of New Arris and Pace shareholders will hold roughly 24% of New Arris. The transaction is expected to be taxable, for U.S. federal income tax purposes, to the shareholders of Arris, they said.

    Arris shares were soaring in after-hours trading Wednesday, up $7.56 (24.75%) to $38.10 each as of about 5:45 p.m. ET.

    Arris chairman and CEO Bob Stanzione will serve under the same title at New Arris, and the then-current Arris board of directors will serve as the New Arris board of directors.

    The companies said the proposed transaction has been approved by their respective boards and expect the deal to close in “late 2015."

    "This transaction is another example of ARRIS's ongoing strategy of investing in the right opportunities to position our company for growth,” Stanzione said. “Adding Pace's talent, products and diverse customer base will provide ARRIS with a large scale entry into the satellite segment, broaden our portfolio and expand our global presence. We expect this merger will enable ARRIS to increase its speed of innovation.”

    “While we believe that Pace is strongly positioned to continue to execute its strategy in the medium and long term, we believe that the combination of the complementary ARRIS and Pace businesses will create a platform for future growth above and beyond our standalone potential,” added Pace chairman Allan Leighton. “We believe this is a great fit for both companies, our employees, customers and trading partners.”

    Pace, primarily known as an international set-top box supplier, expanded into the access network technology business in the fall of 2013 via a $310 million deal for Aurora Networks, a company that has been operating as a strategic business unit of Pace. At the time of the Pace/Aurora deal, it was viewed as one that could help Pace counteract the competitive effects of the Arris/Motorola Home merger and ongoing competition with Cisco Systems, as both Arris and Cisco are strong in the set-top and access network side of the telecom and cable tech business. In December 2012, Pace put in a bid to buy Motorola Home from Google, but ultimately lost out to Arris.

    Under the terms of the deal announced Wednesday, Pace shareholders will receive £1.325 of cash and a fixed exchange ratio of 0.1455 New ARRIS shares for each Pace share, reflecting aggregate consideration as of April 21, 2015 of £4.265 per share, representing a 28% premium to the Pace closing share price as of April 21, 2015, the companies said. The cash portion will be funded through a combination of cash and debt.

    Arris said it has secured a fully committed facility from Bank of America Merrill Lynch to meet the funding requirements.

  • Oil Shippers Take Advantage of a New Boom - google it

  • Oil Shippers Take Advantage of a New Boom http://nyti.ms/1GhOiq1......

  • mikeyhorsehead by mikeyhorsehead Apr 1, 2015 12:59 PM Flag

    http://seekingalpha.com/article/3044896-iran-will-be-shipping-oil-soon-buy-navios-and-tsakos......

  • Charter Communications to Buy Cable Operator Bright House Networks
    The deal, valued at $10.4 billion, comes as the pay-TV industry rapidly consolidates
    By ANGELA CHEN
    Updated March 31, 2015 8:56 a.m. ET
    4 COMMENTS
    Charter Communications Inc. agreed to buy cable operator Bright House Networks LLC for $10.4 billion in cash and stock, the latest deal in a rapidly consolidating pay-television industry.

    Bright House is the sixth-largest cable operator in the U.S. and serves approximately 2 million video customers in central Florida, as well as Alabama, Indiana, Michigan and California.

    Charter is the country’s fourth-largest cable operator said it would become the second-largest cable operator after the deal. Shares of Charter jumped 6.7% to $195.59 in premarket trading.

    “Bright House Networks provides Charter with important operating, financial and tax benefits, as well as strategic flexibility,” Charter Chief Executive Tom Rutledge said in a news release.

    Connecticut-based Charter has struggled as consumers have turned away from more-traditional forms of pay television toward Internet-based entertainment services such as Netflix and Amazon Prime. It had earlier sought to purchase Time Warner Cable, which had a long-standing arrangement to handle programming and technology acquisitions for the Bright House.

    The merged business will be conducted through a partnership that Charter will own 73.7% and Advance/Newhouse—the parent company of Bright House Networks—will own the rest.

    The Bright House cable systems are part of the Newhouse family’s media empire, which also includes publisher Advance Publications Inc. as well as an interest in Discovery Communications Inc.
    In addition, Liberty Broadband Corp. has agreed to purchase $700 million of shares in the new company after the deal closes, with equity ownership totaling about 19.4% of the shares outstanding, out of the 26.3% owned by Advance/Newhouse.

    Advance/Newhouse has agreed to grant Liberty Broadband a voting proxy on its shares, capped at 6%, for the five years following the close of the transaction, such that Liberty Broadband would have total voting power of about 25% at closing.

  • Navios Maritime Partners L.P. (NYSE: NMM) was raised to Buy from Hold at Deutsche Bank.

  • Reply to

    Cape clear out continues - TradeWinds

    by mikeyhorsehead Mar 21, 2015 9:44 AM
    mikeyhorsehead mikeyhorsehead Mar 21, 2015 12:39 PM Flag

    20 March 2015, 21:36 GMT

  • Cape clear out continues
    The capsize segment showed signs of life this week but many operators are still anxious to offload ageing tonnage despite talk that rates may continue to gain traction.
    Nokta is convinced that day rates for capes could top $20,000 in the near term but many of his peers think this is a long shot.
    Nokta is convinced that day rates for capes could top $20,000 in the near term but many of his peers think this is a long shot.
    On Friday a leading sale-and-purchase broker reported that the 151,100-dwt Silver Merchant (built 1995) was sold for recycling in Bangladesh.

    In a weekly market briefing Lion Shipbrokers of Greece told clients that the capsize bulker commanded approximately $413.00 per ldt.

    The price tag suggests the owner, an affiliate of South Korean operator Sinokor Merchant Marine, is poised to pocket roughly $7.4m if the report is accurate.

    While the rate represents a premium when compared to the current market average, which stands at around $360 to $370 per ldt for bulkers sold for scrap in Bangladesh, Lion noted the demolition deal included 1,900 tons of fuel.

    According to Compass Maritime Services, more than two dozen bulkers with individual carrying capacities of 85,000-dwt or more have been torched thus far this year.

    Industry observers say they aren't surprised by the tally and tell TradeWinds that they expect to see the race to scrap elderly capes accelerate in the weeks leading up to monsoon season, which typically takes a toll on demolition activity.

    Rates still too low

    Several were quick to point out that tonnage trading in the spot market is commanding $4,200 per day on average. While rates have been gaining traction for two straight days, one individual noted levels are still well below what most owners need to break even.

    Many equity analysts expect to see day rates increase gradually in the coming months, others say the forecast still looks grim and some are confident capes will experience a sharp but short-lived rebound in the near term.

    On Thursday an equity analyst at Clarkson Capital Markets, Omar Nokta, issued an alert in which he argued that investors should accumulate shares of bulker owners, a call he based on a bet that freight rates for capes could top $20,000 going forward.

    Earlier this month Amit Mehrotra, a researcher at Deutsche Bank, argued that the dry-bulk market will not experience a "material" improvement unless the pace of scrapping accelerates dramatically.

    "Given our forecast of newbuilding deliveries over the next three years, we estimate 100m tons of dry bulk capacity will need to be scrapped to drive reduction in supply, equal to about 13% of current capacity," he wrote in a client briefing.

  • mikeyhorsehead by mikeyhorsehead Mar 20, 2015 5:54 PM Flag

    http://secfilings.com/searchresultswide.aspx?link=2&filingid=10579654........

    DEFINITION OF 'FORM S-4'
    A form that must be submitted to the Securities and Exchange Commission in the event of a merger or an acquisition between two companies. The form must also be submitted for exchange offers.

  • A slump in shipping rates reflects the chronic optimism of shipowners

    OLD salts interpret low-flying seabirds as a sure sign that a storm approaches. For some observers the Baltic Dry Index (BDI), which tracks the cost of shipping iron ore, coal, grain and other materials, is delivering much the same message about the global economy as a wave-skimming albatross. Last month it hit a 30-year low (see chart 1). Yet its decline says more about the predicament of those who own the vessels that carry such cargoes than it does about economic growth or the prospects for world trade. For container ships, which move finished goods, and oil tankers the outlook is less gloomy.

    True, fresh signs emerged this week that China's economy is slowing. Growth this year may be 7% or less, compared with 7.7% in 2013 and 7.4% in 2014. China absorbs three-fifths of the world's ship-borne iron ore--the most commonly carried dry-bulk cargo--and a quarter of its coal. Yet this alone does not seem to justify a two-thirds fall in the BDI over the past year. Clarksons, a shipbroker, still expects Chinese imports of iron ore to grow by 7.5% this year.

    Cargo rates have foundered along with the share prices of shipping firms mainly because the growth of capacity has run ahead of the growth in demand. Some firms have sunk completely. Copenship, a Danish ship operator, went bust in February. Last year the bankruptcy of Genco Shipping was one of the largest in America.

    The industry is suffering a flashback to what happened around the time of the global financial crisis. In the run-up to the crisis China's appetite for raw materials seemed insatiable and shipping rates soared: the BDI peaked in May 2008 at 11,793, more than 20 times its current value. That prompted a frenzy of orders for new ships. But by the time these vessels started arriving, a couple of years later, they were launching into a global slump, so rates plummeted. In 2013, just as the scrapping of old ships and a scarcity of new launches were restoring a semblance of order, Chinese coal imports surged, and the BDI began to recover.

    Shipowners took this as a cue to start ordering ships again. But no sooner had they done so than, in 2014, China's coal imports fell back sharply once more. This was not because of the state of its economy but because a policy to wean the country off coal had begun to take effect, as power began flowing from big, new hydroelectric projects. Ships ordered in 2013 are starting to roll down the slipways, nonetheless, and even record Chinese imports of iron ore are not enough to soak up excess capacity.

    All the steel that China is making with that ore has also been hurting the shipowners, explains Crystal Chan of IHS, a research firm. Usually, low shipping rates encourage the owners of old vessels to scrap them. But a flood of low-cost steel from Chinese mills has brought down the value of scrap metal, making it less attractive to send ships to the breaker's yards.

    There are now signs that shipping's self-righting mechanism is finally beginning to work. Demolition rates have started to pick up, from a low base, and orders for new vessels have all but dried up, says Marine Capital, a shipping investment fund. But it may take a year or two before bulk-carrier rates, and thus the BDI, pick up.

    For other types of ship, things look a bit brighter. Tankers, which shift crude oil and refined products such as petrol, had a period of oversupply and a collapse in rates after a similar ordering binge ahead of the financial crisis. But tanker rates are showing tentative signs of a pickup (see chart 2).

    America's shale-oil boom means it has fewer tankers heading in its direction--but much of the oil produced in the Atlantic basin is now making a longer journey to Asia, keeping tankers busy. Saudi Arabia and fellow OPEC members are still merrily pumping their oil aboard ships. The recent weakness in the crude price has put the oil market into "contango", meaning that the spot price is lower than the forward price. This has encouraged some traders to charter tankers just to store oil and sell it at a higher price later.

    As a result, for some oil tankers rates are at their highest since 2008. That said, some shipowners are said to be negotiating with builders to convert orders for their now unwanted bulkers into ones for tankers, which will bring more supply into the market for those vessels.

    The picture with container ships, which shift manufactured goods, is more complex. There were no reliable indices before the financial crisis, but Trevor Crowe of Clarksons says container rates were hit far harder by the crisis than those for other types of vessel. Since then rates have been choppy (see chart 3). However, the biggest operators of container carriers have become more efficient at managing their fleets, and have swapped old vessels for bigger, more fuel-efficient ones, helping them cope with periods of weakness. Maersk of Denmark, the biggest, reported a record profit of $2.3 billion for 2014.

    In all, the sorry state of the bulk-shipping industry says more about shipowners' incurable optimism than it does about the world economy. Owners are habitually more worried about missing out on an upturn than they are about getting caught by a downturn. This cheery disposition can do serious damage to their wealth. But it means that, over time, shipping rates tend to be lower than they would be if owners were more pessimistic. Far from fretting about the BDI, customers should be grateful for low prices.

  • Arris’s international business will be getting a big lift in the years ahead after announcing Sunday night that it has won a deal to build a next-gen hybrid/fiber coax (HFC) for NBN Co., a government-owned entity, that will bring faster broadband speeds to millions of homes and businesses in Australia.

    Arris CEO and chairman Bob Stanzione hinted at the news last week, announcing on the company’s fourth quarter earnings call on February 18 that the company would soon announce a “substantial deal” to provide cable infrastructure for what was then still an unnamed service provider in the Asia Pacific. In the fourth quarter of 2014, international sales reached $364 million, representing 29% of total sales.

    Arris did not announce the financial terms of the NBN deal, but The Sydney Morning Herald reported that the vendor beat out Cisco Systems for a deal that’s worth about $400 million to Arris, which will provide gear and services to amp up HFC networks operated by Telstra and Singtel Optus. The paper said the HFC networks have the potential to reach 3.4 million premises.

    Billed as the primary vendor and strategic partner in NBN’s HFC-facing endeavor, Arris will supply its flagship product, the E6000 Converged Edge Router, a high-density chassis that started out as a DOCSIS 3.0 cable modem termination system (CMTS) but is evolving to become a fully-fledged Converged Cable Access Platform that will also integrate edge QAM functions.

    Arris will also supply other access products, including its CORWave forward path (1.2GHz) transmitters and OM4100 optical receivers and service assurance products, which provide visibility into the state of the network down to the device level. Additionally, Arris’s Global Services unit has been tapped for the full deployment and network integration for NBN’s national broadband service.

    The roadmap also includes a “possible future migration to DOCSIS 3.1,” an emerging multi-gigabit architecture.

    Arris installations will start in late 2015, with HFC existing predominantly in metro areas such as Sydney, Melbourne, Brisbane, Gold Coast and Perth.

    Arris’s deal with NBN, a unit that is led former Clearwire CEO Bill Morrow (pictured above), comes after the Australian government agreed last year that the rollout should transition from a primarily fiber-to-the-premises model to an “optimized multi-technology mix” approach. The design of that mix is guided by the objective of providing download speeds of at least 25 Mbps to all premises, and at least 50 Mbps to 90% of fixed-line premises as soon as possible.

    NBN Co outlined its multi-tech rollout plans last November, announcing that most households and businesses already served by the Optus or Telstra HFC cable networks will receive fast broadband via network upgrades, and areas where NBN FTTP networks have been deployed or are in the “advanced stages of being built” will remain part of the FTTP rollout. Additionally, NBN said it would continue to use fixed wireless or satellite broadband technologies in the rollouts, and use fiber-to-the-node and fiber-to-the-basement architectures in other communities and multiple-dwelling environments.

    According to NBN, its strategic goals include connecting 8 million premises to “fast broadband” and achieve annual revenues of $4 billion by 2020, and to use less than the capped $29.5 billion government equity funding to achieve them.

    As Morrow explains in this video, NBN believes there are 10 million homes and businesses that need to be connected, noting that, under NBN Co’s phased approach, hundreds of thousands of homes have already been connected. NBN is urging consumers and businesses to check online to see if services are available in their area.


    For the first quarter results for fiscal 2015 (ended Sept. 30, 2014), NBN Co reported revenues of $29 million on earnings before interest and tax of -$377 million. It ended the period with 266,984 cumulative end users, with 202,718 of them served off of fiber, with the balance coming way of satellite and wireless. It ended the quarter with 639,927 premises passed, up from 310,472 in the year-earlier quarter.

    “An HFC network represents the fastest and most cost-effective way to deliver it to consumers and businesses in the existing HFC network areas,” NBN Co. CTO Dennis Steiger said in a statement. “Our goal is to achieve high-speed broadband as quickly possible, with an eye on future technologies that will secure our place as a global technology leader.”

    The ARRIS portfolio of Products and Services are at the heart of many Broadband networks around the world, and we look forward to expanding our presence in the Asia Pacific region.,” added Bruce McClelland, president of Network & Cloud and Global Services at Arris.

  • NBN Co will sign a $400 million deal on Monday with US tech company Arris Group to turn Telstra and Singtel-Optus' cable TV network into one of Australia's fastest sources of high-speed internet.

    Telstra and Optus run hybrid fibre coaxial (HFC) networks that provide millions of Australians with Foxtel Pay TV and broadband services. These will be upgraded by Arris throughoutthe country, and is likely to take three years to complete..

    The HFC networks can potentially reach 3.4 million premises and were signed over to NBN Co as part of deals with both telcos that are expected to be approved by regulators later this year.

    Supporters of Labor's national broadband network claimed it was a waste of money that would deliver slow internet speeds once more users were added to the service. Some existing HFC services are capable of download speeds of only 8 megabits a second, similar to what broadband services using copper phone-lines can deliver.

    The latest deal to upgrade the cable networks aims to counter those concerns by supplying potential download speeds of up to 100 megabits per second and upload speeds of 40Mbps, which is also what Labor was planning to offer under its NBN.

    Sources with an intimate understanding of the deal said the present HFC network was not capable of delivering high upload and download speeds due to much of its equipment being made to a Data Over Cable Service Interface Specification (Docsis) 1.0 standard.

    Arris will be brought in to upgrade the entire network to a Docsis 3.0 standard, which overseas providers have used to deliver download speeds of up to 500Mbps. It will also be more easily upgradeable to a Docsis 3.1 standard, which some vendors claim can deliver up to 1 gigabit per second.

    This will require about 230 telephone exchanges to be upgraded by skilled engineers who may need to be brought into Australia from overseas. It is understood the migration of customers away from Telstra and Optus onto NBN Co systems is a risky venture that could result in substantial service cuts if improperly handled.

    Arris beat fellow US tech supplier Cisco Systems to win the deal, which involves sending field teams out to exchanges to install new cable modem termination systems (CMTS) and to replace retransmission gear.

    NBN Co is expected to run commercial pilot trials involving HFC customers by the end of 2015, with full-scale rollouts from March 2016 onwards. A more detailed rollout plan is expected to be released in the next two months.

    Using HFC customers will give NBN Co a vital boost in fee-paying subscribers that will eventually help the company become a saleable asset for the federal government. It is expected to eventually be sold for a profit as a stand-alone division.

  • mikeyhorsehead mikeyhorsehead Feb 19, 2015 1:25 PM Flag

    I've been reinvesting the dividend under 13.00, and I believe it to be safe 2015 -16.

  • Mrs. Frangou : "We are experiencing the lowest dry bulk rate environment in the 30 years the Baltic dry index has been recorded. In addition, the current charter rates are below the actual vessel operating costs. Typically, a depressed rate environment like this would cause accelerated scrapping and reduced deliveries, and we are seeing both. Year to date, scrapping has accelerated to 4.2 million DWT, more than half of one percent of the global fleet. We are also witnessing deliveries being delayed and a significant reduction in new orders compared to last year. Should the current market environment continue, we may also see layups of vessels. These developments suggest the market is rationalizing and given the continued strong demand for the underlying commodities, we should expect a healthier market in the medium term."

  • mikeyhorsehead by mikeyhorsehead Feb 19, 2015 8:24 AM Flag

    Storage interest wanes
    The crash in crude prices ignited a race to fix tankers for floating storage in early 2015 but activity in this corner of the market is starting to subside, according to an analyst at Clarkson Capital Markets.
    It is widely believed at least 20 VLCCs have been fixed for floating storage.
    It is widely believed at least 20 VLCCs have been fixed for floating storage.
    In a recent client briefing Omar Nokta noted interest has waned in recent weeks, which leads him to believe that the crude tanker segment will exhibit “its normal seasonal pressures” during the second and third quarters of this year.

    “At the start of 2015 we felt spot rates could remain strong despite the likely softer spring and summer months due to tighter vessel supply brought on by floating storage [but] this is shifting,” the forecaster said.

    While crude prices are well below levels seen in 2014 the analyst noted that the most recent rally has compressed contango along the first six months of the futures curve to an average of just $0.75 per barrel per month, versus $1.20 at the peak.

    “We estimate the break-even storage cost at roughly $1.00/bbl per month, making the use of VLCCs for storage uneconomical,” Nokta continued.

    Nokta pointed out that the future still looks “quite favourable”, however, but believes day rates for tonnage trading in the spot market will experience “higher highs and higher lows” than previously anticipated.

    Today, VLCCs trading in the spot market were commanding $54,400 per day, which is slightly higher than Tuesday’s average but represents a decline of nearly 10% week-on-week.

    Nokta acknowledged that day rates have slipped quite a bit when compared to highs seen a few weeks back but argued that they are still relatively strong.

    Earlier in the day analysts at Pareto Securities and other firms were quick to point out that it’s not uncommon for activity to slow in the week leading up to New Year celebrations in China.

    “We remain bullish on the crude tanker markets for 2015 [however] and emphasize that the storage-story could very well come into play again soon driven spring maintenance at refineries and filled-up land-based storage,” they added.

    Forecasters at Platou believe the market's appetite for floating storage will continue to fluctuate in the near-term but are still optimistic about the future of the tanker segment.

    "Since tanker freight rates are the marginal cost of storage, interest for tankers is likely to continue fluctuating with the oil contango in the near term,” they told clients.

    “Strong fundamentals of low fleet growth and high oil trade are key reasons to still be optimistic for tanker freight rates regardless of floating storage, in our view.”

    Spot market stand-off

    Fearnleys claims the start of the March loading programme has been “very slow”, which will likely come as a surprise to many industry observers.

    “We are about to go into the Lunar new year festivities in the East and many had thought a lot of stems should have been covered prior to it but this has not been the case [thus far],” the firm told clients Wednesday.

    Fearnleys noted that day rates plunged sharply at the start of the week, which prompted a brief flurry of fixtures, but said the gap between what charterers are willing to pay and what owners are asking for “has widened sharply”.

    “We therefore have a ‘stand-off’ situation for the time being, the famous game of ‘who-blinks-first’ is being heavily played, and resilience from both sides being tested,” it added.

  • Texas and Louisiana ports believe they're still early in what they expect to be an extended boom in exports of chemical products produced in the region with cheap U.S. natural gas.

    Texas and Louisiana ports believe they're still early in what they expect to be an extended boom in exports of chemical products produced in the region with cheap U.S. natural gas.

    Shale drilling using hydraulic fracturing has lowered the price of gas used for energy or feedstock, and has led companies to invest tens of billions of dollars in petrochemical plants from Corpus Christi, Texas, to the New Orleans area.

    Few expected the fracking boom, and even fewer anticipated the sudden, recent drop in crude oil prices. Port officials and industry analysts, however, don't expect the drop in crude prices to derail growth in the region's petrochemical production and exports.

    Oil production companies have scaled back drilling in response to falling oil prices, and some construction has been delayed for "downstream" petrochemical manufacturing plants. But these plants, some of which represent multibillion-dollar capital investments, are long-term projects that are largely immune to short-term fluctuations in energy prices.

    "The investment is still going on," said Roger Guenther, executive director at the Port of Houston. In recent years, companies have announced some $35 billion in new or expanded petrochemical investments along the Houston Ship Channel.

    Several of those projects are set to open in 2016 and 2017. They're being built primarily to supply export markets.

    "Most projects should remain economic, built as they are for a 30-year life, and built because of assumed low natural gas prices relative to crude long after the current oil-price decline is over," Robert W. Gilmer, director of the Institute for Regional forecasting at the University of Houston, wrote in a recent paper.

    A similar situation exists in New Orleans, where petrochemical exports have surged with expanded production from the dozens of petrochemical plants extending up the Mississippi River to Baton Rouge. The port's chemical exports, mostly containerized, exceeded 2 million tons last year.

    The port has capitalized on the industry's expansion by promoting development of facilities for packaging and container stuffing along the city's Industrial Canal, around where the France Road container terminal operated before Hurricane Katrina in 2005.

  • Sirius XM May Bulk Up Buybacks
    The satellite-radio firm could repurchase $2.5 billion in stock in 2015 and another $2.8 billion in 2016.

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    Updated Feb. 9, 2015 8:14 a.m. ET
    Sirius XM Holdings (SIRI: Nasdaq)
    By Maxim Group ($3.69, Feb. 6, 2015)

    We are maintaining a Buy rating on Sirius XM Holdings and increasing the price target to $5.00 from $4.40.

    We estimate that Sirius’ (ticker: SIRI ) float could be reduced to 28% by the end of 2016. We assume that Liberty Media’s ( LMCA ) current 56% share of Sirius automatically increases to 72% without having to pay a premium. Sirius stock has lagged in the last two years as questions over the growth rate in a connected-car environment create limited investor appetite. The continued growth of subscribers combined with cost discipline allows the company to keep buying back even more stock.

    We estimate that Sirius could buy back an additional $2.5 billion in stock, assuming a $3.90 average share price in 2015 and taking leverage to four times with gross debt increasing to $6.7 billion; in 2016, another $2.8 billion at $4.40 a share could be bought. Currently, $3.5 billion in buybacks is outstanding.

    Sirius coverts 86% of earnings before interest, taxes, depreciation and amortization (Ebitda) into free cash flow in the quarter. With net operating losses (NOLs) not running out until 2019, 80%-plus conversion rates continue for the foreseeable future. Management acknowledged on the call that there was a theoretical possibility of buying Liberty Media stock as a cheaper way of buying Sirius. We continue to recommend Liberty Media as investors are buying Sirius at about $2.80 per share, assuming a full valuation for Liberty Media’s other assets such as Live Nation.

    Sirius is well positioned to continue to beat and raise. While 2015 guidance was only reaffirmed, the net subscriber guidance number of 1.2 million in 2015 looks conservative relative to 2014’s initial guidance of 1.25 million (which was an actual of 1.75 million total and 1.44 million self-pay net subscriber additions). Sirius management highlighted that there are now 27.3 million subscribers with about 70 million satellite-enabled cars on the road. This should increase by nearly 50% over the next three years to about 100 million in 2017, suggesting a long runway. About 71% of new cars come with the radio pre-installed now (up from 69% last year). The current trial funnel is 7.4 million, up from 6.5 million last year. About 15,000 pre-owned car dealers are now marketing to pre-owned car owners as the Sirius marketing machine continues to expand its focus.

    We forecast that 2016 revenue should grow 6.5% to $4.88 billion, up from our $4.58 billion 2015 estimate (estimated growth of 9.4%). Ebitda is estimated to grow 12.2% to $1.87 billion, up from our $1.67 billion 2015 forecast (estimated growth of 14%). Ebitda margins are anticipated to expand a further 200 basis points to 38.5%, relative to 36.5% in 2015 and 35.1% in 2014. We estimate 2016 free-cash-flow-per-share growth of 19% to 33 cents, up from 28 cents in 2015 (estimated growth of 36%). We are assuming slower growth rates in 2016 than 2015 as Sirius matures.

    -- John Tinker
    -- Kevin Rippey

  • Reply to

    Tanker Equities as Hedges?

    by play_tow Jan 30, 2015 10:50 AM
    mikeyhorsehead mikeyhorsehead Jan 30, 2015 12:16 PM Flag

    Good theory. Hope Angeliki is buying.

  • Reply to

    Nobody needs tankers any more.

    by trubulator12345 Jan 28, 2015 11:55 AM
    mikeyhorsehead mikeyhorsehead Jan 28, 2015 12:05 PM Flag

    Hard to understand. Troubling. Greece fall out? Doesn't make sense.

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