Sunday, November 22, 2009

Comments re Global Ship Lease

Apparently I struck a hornets nest amongst investors of Global Ship Lease.

Here are some of the comments posted.

Linda...your post further distributes a mistaken press report as to Global Ship Lease earnings in the current quarter.

GSL did not have a LOSS in the recent quarter. GSL generated actual cash after expenses of $15.4 million in the quarter. As a semantic matter of GAAP accounting, GSL also booked a non-cash loss on interest rate swaps which was larger than the cash generated.

and from another

I shake my head reading your blog today.

Of the three publicly traded long term charter companies that offer containerships - Seaspan, Danaos and Global Ship Lease - GSL is the only one with essentially zero financial exposure to future ship orders.

GSL's total orderbook consists of the two ships you mentioned, both ordered to fulfill an existing long term charter with Zim. If GSL chooses to do so, it is free to refuse delivery of those ships and simply forfeit a relatively small deposit ($15 million) as the only consequence. In all likelihood Zim will ask GSL to to exactly that - gladly reimbursing GSL for the forfeiture rather than honoring the charter expense and losing even more money.
To my view, GSL's lack of orderbook risk going forward opens the possibility that GSL may partner with one or more shipowner banks in to take on and stretch out delivery of ships ordered by CMA, Zim and possibly others. Indeed, this very crisis may result in GSL's becoming the dominant player in long term containership charter.

November 21, 2009 2:12 PM

There are many more comments, but I didn't want to bore everyone.

Ok folks, here's my thinking.

First of all, yes I understand all the accounting stuff.

Here's what I am looking at in the future.

1) Both CMA CGM are not in a good financial situation. Yes, the chairman of CMA CGM says they will make money in 2010, but then, people say a lot of things. If everything came true that officials said, we would have eradicated cancer by now.

2) GSL is a very, very small player in the world of containership owners. The KG Houses of Germany probably own the most containerships which go to the charter market. Many of these companies are in financial straights, and who knows what the domino effect might be.

3) What if CMA CGM and Zim both file for bankruptcy protection? Where does that leave GSL in the line of creditors? I would guess quite far down the list.

I don't know what is the future of GSL. I am not attempting to affect the price of their stock, I only write comments based on my experience in international shipping.

If I chose to gamble, I would give money to my b/f and send him to Vegas to play poker.

Good luck to ya'll.

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