2007

How Eagle Spent Its Summer Vacation

Following quickly on the heels of Genco’s “transforming” transaction, Eagle Bulk Shipping announced yesterday the acquisition of 26 Supramax vessels for $1.1 billion or an average price of approximately $42 million each. Is “transforming” an adequate description of an acquisition that more than doubles the fleet size to 49 ships but more importantly provides substantial firm fixed contracted revenues of approximately $1 billion through 2018? How does “wow” sound? The vessels were purchased from Anemi Maritime Services in a private off-market deal. And, although by appearances, it was a substantial sell-off, we understand that Anemi had over 40 vessels on order.

This serial acquirer and affirmed industry consolidator provided the basics of the deal in a press release and conference call yesterday. The fleet consists of 5 vessels of 53,100 dwt and 21 vessels of 58,000 dwt, which will be delivered between 2008 and 2012. Of the 26 vessels, 21 are secured by long-term time charters running through 2018 and of these 17 have an uncapped profit-sharing component. In round numbers and presuming the vessels are re-delivered at the end of their respective charter periods, the tenors from delivery vary with nine vessels fixed for about 10 years, four fixed for about 7 years, eight fixed for approximately 3 years and five as yet unfixed. It is important also to note that these charters were fixed for ward from periods ranging from a minimum of one to as long as five years out if not longer. A clearer picture of the impact of this deal on the visibility of revenues is shown in the graph, which plots owned days versus contracted revenues.

This is only an excerpt of The Week in Review – 07/26/2007

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