ECONOMY

Greek groups lead used-ship market as they successfully negotiate purchases and sales

International shipping has very recently seen significant purchases as the used-ship market shows intense activity. Shipping market circles point out that the increase in sales and purchases of used ships (aged over 15 years) recorded since the beginning of 2004 is mainly attributed to the reduction in places available for building new ships, as well as a steep rise in orders for all types of ships. Another factor leading to the increase in activity in the used-ship market is the respective rise in the cost of building brand-new vessels. Besides the international rise in the price of steel, the market also suffers from a scarcity of propulsion engines for ships, as well as electrical generators, causing a boost to the final cost. Certainly, Greek shipping groups cannot just sit by watching these developments, as they appear to play a leading role both in markets and in ship sales. The Restis group last week made one of the biggest purchases globally, through its holding company First Financial Corp. It managed to win the tender and purchase 32 bulk carriers from Malaysia International Shipping Corp. (MISC), beating General Maritime Corp (Genmar) and the Islamic Republic of Iran Shipping Lines (IRISL) in the final heat. The amount of the deal is estimated at $740 million, as bulk-carrier prices have gained at least 20 percent in the last three months. Unconfirmed information suggests that for the 32 ships of MISC, bids from at least 20 groups were submitted, including from Pacific & Atlantic of Ioannis Pateras; Drytank of Giorgos Economou; Frontline; Zodiac and the administrators of several equity mutual funds who, however, lacked the shipping experience required. What seems to have tipped the balance in favor of First Financial is MISC’s intention to sell the ships as soon as possible, requiring the buyer to be able to receive and manage them in a short period of time. With this purchase, First Financial has managed to double its fleet to 63 bulk vessels, further strengthening the Restis group, which is now among the five biggest shipping groups in Greece. The ships’ delivery is to be concluded by the end of March 2005. The group will probably not stop there: According to Lloyd’s List, Golden Energy Management, Restis group’s tanker branch, is soon expected to express interest in buying Cypriot company Stelmar Shipping, 20 percent of which is controlled by the well-known Haji-Ioannou family. The interest from Global Energy Management came after the failure of a purchase proposal (of $700 million) submitted by Fortress Investment, as Stelios Haji-Ioannou (also chairman of Easygroup) «torpedoed» the agreement. Another Greek name among candidate buyers is that of Gavriil Panayiotidis, the major shareholder in Torm, from Denmark. Rapidly developing Top Tankers, of the Pistiolis family, is expected to proceed soon with the purchase of five double-hulled tankers with a price tag of $256.5 million, as agreed to with seller Essar Shipping. Part of this is expected to be funded by the recent issue of new shares of which about $130 million was drawn. Since July, the company’s shares have been on the NYSE Dow Jones index, drawing some $146 million upon its entry, a record amount for a shipping company the last five years. The Prokopiou group, through its Dynacom company, confirmed last week the purchase of eight single-hulled VLCCs from Vancouver-based Teekay Shipping, which has recently been upgrading its fleet. Though no specific amount has been revealed by the Prokopiou group, shipping market agents (according to the specialist publication Trade Winds) assess the deal at $192 million. The group already occupies the top spot in the single-hulled VLCC category with seven ships. Ciel Shipmanagement of the Costamare group recently confirmed the purchase of S Caboto, a box-ship with a shipping capacity of 1,068 teu (container), for an amount approaching $18 million, according to estimates. If this amount is confirmed (Costamare will not reveal any details of the deal yet), it will mark a new record in purchases of box-ships of this size, indicative of the increase in the price of these vessels too. Apart from purchases, Greek shipowners also are getting involved in particularly profitable sales, making the most of an international rise in prices. For example, Oceanbulk recently sold Mercurian Virgo (150,000 dwt) to a Chinese company for $40 million, almost twice the price it bought the ship for in July 2001. About two weeks earlier, the company had sold its biggest ship, Garbantua (224,000 dwt) to German company Neu Seeschiffahrt for $33.5 million, having spent $19.7 million on its purchase in 1997. Similarly, Thenamaris of the Martinos group recently sold Sea Voyager (148,000 dwt) for an amount approaching $37 million. The company bought the tanker for $28 million in 2000.