Shipping stocks sink

THE SHIPPING sector is finding it even harder to ride the global financial storm than experts had predicted. Navios Holdings is the latest to cancel newbuilds, while numerous Greek shipping companies listed on the Nasdaq and the New York Stock Exchange (NYSE) have seen their share prices plummet some 80 percent or more.
The global credit crunch and world stock markets crash has also put considerable strain on Aries Maritime, the Nasdaq-listed Greek shipping company. As a consequence, Aries is in talks with its banks to seek support during the global financial crisis, a company source told the Athens News.
"We are in discussion with the banks right now," the source said.
Aries has lost over 80 percent of its share value and is now trading at well under $1. The source declined to name Aries' bankers or to say if any newbuilds on order will have to be cancelled. A spokesperson for Aries declined to comment.
Nonetheless, an industry source cited Aries as a candidate for a take private - where minority shares are bought out and the stock delisted. The problem is that minority shareholders are unlikely to sell at a loss.
Aries is controlled by Rocket Marine. It appointed Jeff Parry as the new chief executive officer on July 8.
Aries' fleet comprises nine product tankers (five double-hulled MR tankers and four double-hulled Panamax tankers) and three container vessels. Per its balance sheet, Aries saw revenue of $19.3 million for the three months ending 30 June 2008, in contrast with $21.3m the previous corresponding period. The market cap of Aries has fallen to around $22m.
Navios cancels a dozen new ships
NYSE-listed Navios may have also hit a rocky patch. It has scratched orders for 12 newbuilds and slashed its quarterly dividend by one-third. Three cancelled Capesize newbuilds will offer savings of $265 million, the company announced on November 17. It has had to pay cancellation fees of $1.5 million to SPP, the South Korean shipyard.
The measures were needed to shore up the company's finances to better weather the global storm, it is understood.
"We believe that Navios' flexible business model and conservative strategy will benefit us during this difficult period in the drybulk market," said Angeliki Frangou, chairman and CEO of Navios. "Our core fleet is 82 percent covered for 2009 and 59 percent covered for 2010. We have also taken steps to preserve capital by cancelling 12 unfixed vessels."
Readers may remember that Frangou, who also heads up IRF European Finance Investments, bailed out of Proton Bank earlier this year prior to its stock market crash, selling 10 million of IRF's shares in Proton for 65m euros.
For its part, Navios' share price fell 12.96 percent to $1.41 during midday trading on November 19. This compares to a high point over the last year of $15.58. The low stock price is a chance for Navios to buy back some of its own shares.
"We have increased the share repurchase programme by $25 million and intend to maintain a quarterly dividend of $0.06 per share, commencing with the fourth quarter of 2008," Frangou added.
Top Ships to keep orders afloat
Meanwhile, the Athens News has learned that another Nasdaq-quoted, Greece-headquartered player, Top Ships, wants to stay listed, having terminated an exclusive sale talk agreement with George Economou (of DryShips fame), a company source and an insider told this newspaper. The offer price made by Economou, who is already a 14-percent shareholder in Top Ships, was not acceptable, the insider said.
"We believe it is in the best interests of the company to stay listed," the source said. He noted that Top Ships' shares have dropped some 80 percent and, therefore, it's not a good time to sell.
Another company executive said that there are advantages and disadvantages to staying listed but that the offer made by Economou was "not in the best interests of remaining shareholders".
Both executives said that Top Ships has no shortage of liquidity. Unlike Navios and other companies in the industry, they have not had to cancel any new projects.
Top Ships had $24m in cash as of 30 June 2008. The company has six new tanker builds underway with solid financial backing for all of them, both added. Top Ships' newbuilds are tankers from SPP, each with 50,000 deadweight tonnage. They are due for delivery between the end of January and the end of June 2009. The company's existing fleet consists of five Suezmax crude oil tankers and seven Handymax tankers that ship refined petroleum products, or crude oil.
Experts see no signs of improvement in the industry, however. Dry cargo transportation rates have dropped by more than 90 percent this year as a five-year boom threatens to turn to bust.


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