The Great Re-capitalization

“Equity is the new debt,” I told an investor luncheon in New York yesterday when asked to describe the current conditions in the ship financing markets.

The comment was intentionally naïve, especially when you consider that many shipping companies have negative net worth on a charter-free basis and are facing a grim outlook of systemically shrinking demand and steadily swelling supply in virtually every asset class (except reefers!).

But my point was with the debt markets dead and owners in need of recapitalization to satisfy loan covenants and maintain adequate working capital, one way or another the majority of cash needed by the industry is going to come from some type of equity market – and this will be either very dilutive, or a complete cramdown, of today’s

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