Monday, March 17, 2014

The Saga of Genco Shipping & Trading Continues, But the End Is Nearer

Genco Shipping & Trading Limited (GNK) has been on a death row since its admission last month that it had missed an interest payment and had negotiated a 30-day default waiver with its lenders. With the 30-day deadline fast approaching on March 18th, the company disclosed today that it was also not going to file its annual report on time. While failing to file a timely annual report is the least of the company’s concerns at this stage, it is important to note two additional disclosures made in today’s filing with the SEC.

First, the company’s annual report may include a going concern uncertainty disclosure. This should not come as a surprise to anyone since Genco has been classifying its debt outstanding (at the parent level) as current since March 31st, 2013.

Second, the company provided preliminary estimates for last year’s results on a consolidated basis. Despite an estimated operating loss of $67 million and a total loss of $157 million for the year, the company was able to generate approximately $4 million profit from operations during the fourth quarter of 2013.

This is the first time Genco is generating a quarterly operating profit in two years. Unfortunately it may come as too little too late for its shareholders.

Given its fast deteriorating cash balance, it is very likely that Genco will seek court protection from its lenders as early as this week.

But not all may be lost for shareholders. As I analyzed in my recent Seeking Alpha Pro article, while the company’s capital restructuring is inevitable, improving freight markets and asset values may still leave existing shareholders with a piece of the company’s new equity.

Tuesday, February 25, 2014

Shipping Preferred Shares

I recently had the opportunity to publish a detailed survey of shipping preferred shares on Seeking Alpha. Shipping companies have been busy issuing preferred shares as a way to raise equity funds without diluting common shareholders. 

Whether preferred shares are a one-time hit wonder or a permanent trend remains to be seen. But there has been a critical mass of these securities to warrant monitoring & follow-up. In the table below, I intend to update all pertinent information on existing shipping preferred shares, as well as new issues. 

I welcome your feedback on what information you would like to see and of any preferred shares I might have missed / should include in my survey.

Monday, February 17, 2014

Diana Shipping Inc. - Earnings Preview 2013-Q4

I estimate that Diana Shipping Inc. (DSX) will report a net loss of ($8,800,000) or ($0.11) basic loss per share for the last quarter of 2013. The company’s bottom line for the quarter has been negatively affected by the results of Diana Containerships Inc. (DCIX). During the quarter Diana Containerships sold one vessel for scrap, and took an impairment loss on a vessel scheduled for demolition this month. Based on my estimates, Diana Shipping’s loss from its investment in DCIX for the quarter was ($1.9 million).

The results were also negatively affected by the early redelivery of M/V Houston. The company had to write-off the entire $3.05 million prepaid charter revenue associated with M/V Houston during the quarter, instead of the scheduled $0.75 million amortization. 


 

As of year-end, Diana Shipping had total debt outstanding of $433 million, and cash on hand of approximately $240 million. Last August, the company had extended a four-year $50 million loan to Diana Containerships. This month Diana Shipping returned to the capital markets, raising $60 million in gross proceeds through the sale of 2.4 million preferred shares. The preferred shares pay an annual dividend of 8.875%.

As of year-end, the company operated a fleet of 36 owned vessels with a total DWT capacity of 4.1 million MT and an average age of 7.22 years. Diana Shipping currently has five new-building vessels under construction, two of which are scheduled for delivery in the first half of this year, and the remaining in 2016.

The shares of Diana Shipping are traded on the New York Stock Exchange and closed on Friday at $12.69 per share. Its current market capitalization is approximately $1.05 billion.