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Monday, May 25, 2009

Safe Bulkers takes cash for early termination on five ships

Nigel Lowry, Athens - Friday 22 May 2009


COMPENSATION under deals to take two ships back early from charterers pushed US-listed Safe Bulkers to increased profits for the first quarter.
The Athens-based dry bulk owner is also set to gain more cash from a further three early charter terminations, it has disclosed.
Net income rose to $62m, a jump of 163% compared with the first quarter of 2008, after the company booked $29.7m in early redelivery income.
Charterers paid the company $25.5m for terminating the charter of the panama Efrossini, which had stood to earn a total $35.7m over the full term of the charter if it had run until the due date of January 2011.
The vessel was redelivered in mid-March and has since been trading in the spot market, while Safe Bulkers also received a much smaller amount for the slightly early redelivery of another panamax in January.
Net revenue for the first quarter decreased by 4.9% to $46.9m, mainly reflecting the employment of some ships on long term charters stemming from previous periods and only “to a lesser extent” lower spot market rates, said the company.
A further three ships — the panamaxes Maria and Katerina, and the kamsarmax Pedhoulas Leader — are due for early redelivery in June and July following deals cut with their charterers.
According to the company in return it is due to collect a total $38.6m to $41.9m, depending on actual redelivery dates, and the vessels will be available for re-employment although nothing has yet been fixed.
It is estimated this is about half what might have been earned over the full term of the three charters.
Safe Bulkers has also acted to reduce forward expenditure by cancelling two kamsarmaxes, forfeiting deposits of $7.2m on each vessel.
Dropping the pair leaves a further five newbuildings still contracted on the company’s order book. These include two capesizes on order in China priced at $80m and $81m, two post-panamaxes of 92,000 dwt on order in Korea at $73.5m each and a further, slightly larger, postpanamax orderd in Japan for $68.4m.
Safe Bulkers’ chairman and chief executive Polys Hajioannou said the company was continuing to “closely manage [its] business through the current recession.”
He said: “We selectively entered into early-termination agreements with respect to certain of our charters in exchange for compensation from those charterers. We successfully amended our loan agreements with our lenders to address the current depressed market values of drybulk vessels and in the second quarter of 2009 have reduced our capital expenditure exposure through selective newbuild cancellations.”
The company has declared a dividend of $0.15 per share for the first quarter of 2009.