BMTI Investment Review (12 April 2019)

euro financeOperator Western Bulk Chartering announced that it has secured new debt financing and intends to raise US$ 15m in equity, ensured by its two main shareholders, in order to “support further growth” and strengthen its financial platform, said CEO Jens Ismar. The bond of US$ 35.1m (and US$ 31.74 outstanding) will be repaid in full, according to a statement from the company. WBC made an after-tax profit of US$ 4.2m last year, but suffered a big write-off in the second half of the year (US$ 10m) due to ill-timed time charter contracts signed by its Chile office. This year so far has also proven rather challenging for dry bulk markets, necessitating fresh financial support before the expected market recovery in the second half of 2019 in which the firm will “utilize the current market volatility” to its advantage, Ismar says.

Intended to provide so-called alternative financing for new shipping projects, General Credit Corp has been in development by Peter Georgiopoulos. The shipping magnate is reportedly working with at least two other executives in the publicly-listed shipping sphere, believed to be ex-Gener8 CFO Leo Vrondissis and ex-Gener8 VP of Finance George Fikaris. The fund is being developed in the growing realm of alternative finance, lending to shipowners (at higher margins) who can’t access funding from traditional ship lenders. Traditional maritime funding has become increasingly tight after the financial crisis and the collapse of generous shipping credit pre-2008. It remains unclear when the fund will be launched.

German bank NordLB, which recently announced its intention to completely withdraw from shipping, reported this week that it had sold off one portfolio of non-performing loans (NPLs) in shipping (nicknamed “Big Ben”) for a total of EUR 2.6 billion to US hedge fund Cerberus Capital Management. The portfolio, holding loans for 263 vessels, is categorized as 90% non-performing and will lower the bank’s total NPL shipping loans to EUR 4.9 billion from a previous level of EUR 7.5 billion at the end of last year.

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