Friday, July 31, 2009

Global Ship Lease buys time

Lloyd's List reports Global Ships Lease has convinced the banks to postpone (again) the loan-to value tests on their ships.

Janet Porter - Friday 31 July 2009
GLOBAL Ship Lease, the containership owner in which CMA CGM has a sizeable interest, has obtained a further loan waiver from its banks while the two sides discuss amendments to its $800m credit facility.

The existing waiver expires today, but New York listed GSL said it had agreed with its lenders to extend its waiver for loan-to-value tests until the end of August. In the meantime, dividend payments remain suspended.

At issue are ship prices, with bankers concerned about the decline in charter free market values of containerships.

The company had initially been required to submit vessel valuations in April and previously received a waiver from loan-to-value tests until the end of July.

OK, that doesn't bother me too much.

However, when I got down to this comment in the article, I started get that funny feeling.

GSL currently owns 16 vessels and has contracted to purchase an additional three ships. That includes the CMA CGM Berlioz, to be bought from the French line for $82m in September, contingent on financing.

Oh, that's just great. Like something DryShips would do. Sell a ship from CMA CGM to Global Ship Lease, probably for a price much higher than current market value.
I am just guessing. I don't know for sure, but if the price was fixed even 6 months ago, it's more than it's worth today.

And, they have contracts for a couple of more ships, to be chartered out to Zim??!!

The company also has contracts in place to buy two newbuildings from German interests for approximately $77m each, which are scheduled to be delivered in the fourth quarter of 2010 with charters to Zim.

Zim isn't going to need any more ships. They are having financial troubles of their own.


Anonymous said...

The ships GSL is to acquire for charter to Zim will be accepted from the current German owners only if Zim confirms it will honor the prenegotiated long term charter rates. If Zim says otherwise, the contract releases GSL from obligation of accepting those ships (per GSL CEO on the immediate past ER call).

Lynda Applegate said...

Thank you for your comment.

From the recent news of Zim, I would guess it's a sure deal they won't be taking these ships. So, we shall get to see if what the GSL CEO said holds water.

Anonymous said...

In response your comment on the Berlioz -- note that while the ship value was above market, so was the corresponding lease rate. With respect to Zim, GSL's maximum liability as stated in the Hull agreement (found on the SEC website as an attachment to a GSL 6-K filing) is the $15MM deposit.

Anonymous said...

Correction to my prior post. The Hull agreements for the Zim ships are attached to GSL's F-1 filing dated 9-18-2009 and the hull agreement can be found here:

Sections 13 & 14 are the pertinent sections.