Funding coastal shipping

The interest of many banks in funding the investment plans of many coastal shipping companies has now been rekindled, particularly concerning listed companies and Hellenic Seaways (HSW). The financial reports of those firms are showing significant improvement, while their banking obligations were reduced, in the first half of the year, by a third within four years, falling to 1.4 billion euros from 2.1 billion euros in 2002. Local and foreign investors who are particularly interested in investing in coastal shipping are reportedly joining forces with banks, from Greece and abroad, and are exerting pressure in favor of accelerating projects that had already begun and as regards the possible cooperation or even merging of shipping companies. The aim is the creation of two big groups whose size will be similar to those in Europe, so that investing in them will entail less risk. A key factor for the change in the banks’ attitude, with foreign investors following, was the improvement in the finances of firms, mainly thanks to their operating and net profits, despite the rise in fuel prices. In the first half of 2006, according to the financial figures of listed firms, their liabilities declined as follows: – Attica Group, including Blue Star Ferries, had long-term obligations of 437.3 million euros and short-term debts of 47.6 million euros, a total of 484.9 million euros. – Minoan Lines had 412.7 million euros in long-term obligations and 66.6 million euros in short-term, totaling 479.3 million euros. – ANEK had 276.8 million euros long-term and 34.4 short-term obligations, 311.2 million euros in total. – Maritime of Lesvos (NEL) had long-term obligations of 62.5 million euros and 8.1 million euros in short-term debts, a total of 70.6 million euros. All five listed companies had 1.189 billion euros of long-term debts between them, along with 156.7 million euros in short-term debt, a total of 1.346 billion euros. The reduction in bank obligations of coastal shipping companies, as associates of shipping consultancy firm XRTC, advising French bank Natexis Banques Populaires, told Kathimerini, is «beyond the normal repayment of debts, it is due to the sale of ships by companies.» «The further reduction of the coastal shipping fleet does not seem to be part of the companies’ plans, as that would put a brake on the operation of their routes,» says the CEO of XRTC, Giorgos Xiradakis. He adds that the sales of ships have improved the finances of companies as well as their ticket sales. «However, companies require further growth in order to sail safely into the future,» Xiradakis suggests. Several ships have been sold since 2003: six Superfast vessels of the Attica Group, five ships of Blue Star Ferries and four vessels of Minoan Lines. Both listed and non-listed coastal shipping companies have received bank loans in order to develop their fleets. Some 71 percent of the 1.4 billion owed by companies concern debts to foreign banks, with the remaining 29 percent owed to local credit institutions. XRTC data shows that 92 percent of bank loans go to listed firms. Xiradakis believes there now is a momentum creating opportunities in the coastal shipping market, summarized as follows: – Administrations of high quality and momentum with long experience in management practices in tough market conditions. New realistic structures of loan deals have been realized after the completion of loan repayment. The government, with its shipping policy, aims at the upgrade of port infrastructures. – Entry of private entrepreneurs as strategic investors and shareholders and the liberalization of fares from the port of Piraeus. – There is room for further mergers and partnerships, creating strong groups ready to respond to the increasing competition.