Sunday, July 26, 2009

Global Ship Lease update

I did a blog posting about Global Ship Lease back in Feb. 2009

Here's the link. How Independent is Global Ship Lease

Apparently it got picked up this weekend by some people who invest in this stock.

So, I thought I would take a look at what's going on with Global Ship Lease. I do not pretend to be a stock analyst, so if someone can clarify anything I get wrong, feel free.

I had trouble getting the entire recent SEC filings to pull up from their web-site. It named PINE RIVER CAPITAL, but as it was dated July 23, 2009, maybe they have a couple of days to complete the paperwork.

Here's the link to their SEC filings. Perhaps someone smarter than me can figure it out.

They also filed a "safe harbor statement" on June 26, 2009 as part of their "Update on Credit Facility". (click here for link)

In this they list 21 types of "risk and uncertainties".

I haven't read a lot of these types of statements, but this one looks excessively long to me. They did not mention the possibility of a giant meteor hitting the earth, but they covered just about everything else.

These 2 caught my eye.

- Global Ship Lease's ability to enter into long-term, fixed-rate charters;

- the continued performance of existing long-term, fixed-rate charters;

That's enough for now. It's Sunday, and I should get a life.


Edgetrader said...

I used to work at a publicly traded company and the CFO said to me, there is a game you play with these disclosure's called sit around and dream up any possible risk so you can cover your liability in case anything remotely goes wrong. These statements are helpful to think through the risks, but you have to weight the possibilities by their respective probabilities

Anonymous said...

I agree with Edge.
I've read a lot of these "risks and uncertainties" statements in various filings, and the way the game is played is to list out anything that could possibly happen, just so that if it ever does, you can say "I warned you about that..."
In my mind, the primary risks with Global Ship Lease are
1) the possibility that the banks will destroy a good-paying customer by insisting on some impossible revision to the loan agreements; or
2) the possibility that CMA CGM, the primary customer and primary shareholder, will "eat its young" and force some drastic cutback or revision to the long-term charters.
Both possibilities are, in my mind, remote.

BK_mgr said...

"risks and uncertainties" - most of it is usually boilerplate material ... granted, some are valid risks and must be considered while most are "risks" w/ chances that are pretty remote ... there's usually less than a handful that really need to be scrutinized ... BTW Lynda, you're comments are welcome as it brings another fresh voice to the GSL quagmire ... ;-)

Anonymous said...

Thanks everyone for your comments.

Can anyone tell me what is going on with the SEC filing of July 23rd?

Anonymous said...

The July 23 filing reports that Pine River (a fund) picked up 1.5 million shares in a private transaction. Its convoluted, but long time followers of the stock have unearthed that meaning based on the filing and trading in the days prior. should go to the Yahoo GSL post called FAQ and review some of the links there. GSL is in the same mired container market as all, but benefits from average charter length of 10+ years across the entire fleet. Has no orderbook for any unchartered newbuilds (and only three of those).

As mentioned above, the only "real" risks that are visible from here would be: 1) if the banks lose their minds and decide to foreclose on a profitable, paying borrower over the LTV covenant (DAC by comparison got that covenant waived despite much tougher financial issues going forward), and 2) if CMA CGM fails or goes postal on GSL...which seems remote.

It may be a late bloomer, but GSL seems an attractive deep value investment here. One of the primary reasons it lags is very few people follow the company. Thanks for your coverage!