kl02073.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported): February 27,
2009
GENCO
SHIPPING & TRADING LIMITED
(Exact
Name of Registrant as Specified in Charter)
Republic
of the Marshall Islands
|
000-28506
|
98-043-9758
|
(State
or Other Jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer
Identification
No.)
|
299
Park Avenue
20th
Floor
(Address
of Principal Executive Offices)
|
|
10171
(Zip
Code)
|
Registrant’s
telephone number, including area code: (646) 443-8550
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General
Instruction A.2. below):
r
|
Written
communications pursuant to Rule 425
under the Securities Act
(17
CFR 230.425)
|
r
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
r
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
r
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
8.01. Other Information.
The
Company is filing the following information on this Current Report on Form 8-K
which was included in its earnings release and Current Report on Form 8-K dated
February 25, 2008:
The
following financial review discusses the results for the three and twelve months
ended December 31, 2008 and December 31, 2007.
Fourth Quarter 2008 and
Year-to-Date Highlights
·
|
Recorded
a net loss of $111.3 million, or $3.56 basic and diluted loss per share
for the fourth quarter, including an impairment loss of $103.9 million
relating to the Company’s investment in Jinhui Shipping &
Transportation Limited and a $53.8 million charge to operating expenses
related to the forfeiture of the 10% deposit from the cancellation of the
previously announced six vessel
acquisition;
|
·
|
Amended
the $1.4 billion revolving credit facility to waive the collateral
maintenance requirement until such time that Genco is in a position to
satisfy the covenant and other conditions previously
announced;
|
·
|
Took
delivery of the Genco Hadrian and delivered the vessel to Cargill
International S.A. for the commencement of a 4 year time charter contract
at $65,000 per day with a 50 percent index-based profit sharing component;
and
|
·
|
Negotiated
the cancellation of the previously announced acquisition of six drybulk
newbuilding vessels with an aggregate purchase price of $530 million and
repaid $53 million in related debt.
|
Financial Review: 2008
Fourth quarter
The
Company recorded a net loss for the fourth quarter of 2008 of $111.3 million, or
a $3.56 basic and diluted loss per share. The Company deemed its
investment in Jinhui Shipping and Transportation Limited to be
other-than-temporarily impaired as of December 31, 2008 due to the severity of
the decline in its market value versus its cost basis. As a result,
during the fourth quarter of 2008, the Company recorded a $103.9 million
impairment charge as other expense in the Consolidated Statement of Operations.
Prior to recording this impairment, the Company reflected any gains or losses
associated with this investment as a component of other comprehensive income in
equity. We also realized a $53.8 million charge to operating expenses related to
the forfeiture of the 10% deposit from the cancellation of the six vessel
acquisition, a $2.2 million write-off of deferred financing fees associated with
the cancellation of our $320 million credit facility, and a $1.9 million
write-off of deferred financing fees related to the amendment to the $1.4
billion revolving credit facility. These events were slightly offset by a $2.0
million gain associated with our forward currency contracts.
Genco
Shipping & Trading Limited revenues increased 55% to $101.6 million for the
three months ended December 31, 2008 versus $65.7 million for the three months
ended December 31, 2007, due to the operation of a larger fleet and higher
charter rates for our vessels.
The
average daily time charter equivalent, or TCE, rates obtained by the Company’s
fleet increased 13.4% to $35,304 per day for the three months ended December 31,
2008 compared to $31,140 for the three months ended December 31, 2007. The
increase in TCE rates was due to higher charter rates
achieved
in the fourth quarter of 2008 versus the fourth quarter of 2007 for two of the
Panamax vessels, six of the Supramax and Handymax vessels, and two of the
Handysize vessels in our current fleet. Furthermore, higher TCE rates were
achieved in the fourth quarter of 2008 versus the same period last year due to
the operation of one additional Capesize vessel acquired as part of the
Metrostar acquisition and the operation of two more Panamax vessels acquired as
part of the Bocimar acquisition. This was partially offset by lower revenues
from our profit sharing agreements on our Capesize vessels.
Total
operating expenses increased to $93.9 million for the three months ended
December 31, 2008 from $0.5 million for the three-month period ended December
31, 2007 due to higher vessel operating expenses, general and administrative
expenses and depreciation and amortization related to the operation of a larger
fleet. Total operating expenses for the fourth quarter of 2008 included a $53.8
million charge related to the forfeiture of the 10% deposit from the
cancellation of the six vessel acquisition. Total operating expenses for the
same period in 2007 included a $23.5 million gain from the sale of the Genco
Commander. Vessel operating expenses were $13.5 million for the fourth quarter
of 2008 compared to $8.1 million for the same period last year. The increase in
vessel operating expenses was due to the operation of a larger fleet, higher
crewing, and insurance expenses, as well as the operation of more Capesize
vessels for the fourth quarter of 2008 versus the same period last
year.
Depreciation
and amortization expenses increased to $19.9 million for the fourth quarter of
2008 from $11.6 million for the fourth quarter of 2007 related to the growth of
our fleet. General and administrative expenses increased to $4.1 million from
$3.0 million during the comparative periods due to costs associated with higher
employee non-cash compensation and other employee related costs. Management fees
were $0.7 million for the three months ended December 31, 2008 and $0.5 million
for the three months ended December 31, 2007, respectively, and relate to fees
paid to our independent technical managers.
Daily
vessel operating expenses grew to $4,734 per vessel per day during the fourth
quarter of 2008 from $3,824 for the same quarter last year as a result of higher
crew and insurance expenses. We believe daily vessel operating expenses are best
measured for comparative purposes over a 12-month period in order to take into
account all of the expenses that each vessel in our fleet will incur over a full
year of operation. For the full years ended December 31, 2008 and 2007, the
average daily vessel operating expenses for our fleet were $4,400 and $3,716
respectively.
Financial Review: Twelve
months 2008
Net
income was $86.6 million, or $2.86 basic and $2.84 diluted earnings per share
for the twelve months ended December 31, 2008 compared to $106.8 million, or
$4.08 basic and $4.06 diluted earnings per share for the twelve months ended
December 31, 2007. The Company deemed its investment in Jinhui Shipping and
Transportation Limited to be other-than-temporarily impaired as of December 31,
2008 due to the severity of the decline in its market value versus its cost
basis. Prior to recording this impairment, the Company reflected any gains or
losses associated with this investment as a component of other comprehensive
income in equity. As a result, during the fourth quarter of 2008, the Company
recorded a $103.9 million impairment charge in its Consolidated Statement of
Operations. The Company also recorded a $53.8 million charge related to the
forfeiture of the 10% deposit from the cancellation of the six vessel
acquisition, a $26.3 million gain from the sale of the Genco Trader and $7.0
million of income received from its investment in stock of Jinhui Shipping and
Transportation Limited. Revenues increased 119%
to $405.4 million for the twelve months ended December 31, 2008 compared to
$185.4 million for the twelve months ended December 31, 2007. TCE
rates obtained by the Company increased to $37,824 per day for the twelve months
ended December 31, 2008 from $24,650 for the same period in 2007. Total
operating expenses were $171.0 million for the twelve months ended December 31,
2008 compared to
$54.3
million for the twelve months ended December 31, 2007, and daily vessel
operating expenses per vessel were $4,400 versus $3,716 for the comparative
periods.
Liquidity and Capital
Resources
Cash
Flow
Net cash
provided by operating activities for the twelve months ended December 31, 2008
and 2007, was $267.4 million and $120.9 million, respectively.
The increase was primarily due to the operation of a larger fleet, which
contributed to an increase in net income as well as adjustments to reconcile net
income to operating cash flows, including increases in depreciation and
amortization. Adjustments to reconcile net income to operating cash flows
include $22.4 million of amortization of value of the time charters acquired as
part of the Metrostar and Evalend acquisitions, $13.7 million of realized gain
on forward currency contracts, $7.0 million of realized income from investments,
and $26.2 million in gains from the sale of the Genco Trader. The adjustments to
operating cash flow above were offset by a $103.9 million non-cash impairment on
our investment in Jinhui Shipping & Transportation Limited, a $53.8 million
loss on the forfeiture of vessel deposits, also reflected as a payment in cash
used in investing activities, $15.4 million of unrealized loss on forward
currency contracts, and $6.0 million of amortization of non-vested stock
compensation. Net cash provided by operating activities for the twelve months
ended December 31, 2007 was primarily a result of recorded net income of $106.8
million, adjusted for depreciation and amortization charges of
$34.4 million.
Net cash
used in investing activities was $514.3 million for the twelve months ended
December 31, 2008 as compared to $984.4 million for the twelve months ended
December 31, 2007. For the twelve months ended December 31, 2008, cash
used in investing activities primarily related to the purchase of vessels in the
amount of $510.3 million, deposits on vessels to be acquired of $3.5 million,
payments for forfeited vessel deposits of $53.8 million and the purchase of
$10.3 million of Jinhui stock. The above were offset by proceeds from the sale
of the Genco Trader in the amount of $43.1 million, $13.7 million in proceeds
from forward currency contracts and $7.0 million of realized income from
investments. For the twelve months ended December 31, 2007 the cash used in
investing activities mostly related to the purchase of vessels in the amount of
$764.6 million, deposits on vessels to be acquired of $150.3 million, and the
purchase of investments of $115.6 million, offset by the sale of the Genco Glory
and the Genco Commander in the cumulative amount of $56.5 million.
Net cash
provided by financing activities for the twelve months ended December 31, 2008
was $300.3 million as compared to $861.4 million for the twelve months
ended December 31, 2007. For the twelve months ended December 31, 2008,
net cash provided by financing activities consisted of the drawdown of $558.3
million related to the purchase of vessels and $195.4 million in net proceeds
from our May 2008 follow-on offering. These inflows were offset by the repayment
of $321.0 million under the 2007 Credit Facility and the payment of
cash dividends of $117.1 million. For the same period last year, net cash
provided by financing activities consisted of $1,193.0 million of proceeds from
the 2007 Credit Facility related to the purchase of vessels and $77.0 million of
proceeds from a short-term line used to finance the purchase of Jinhui shares,
and was offset by the repayment of $257.0 million under the 2007 credit facility
and the payment of cash dividends of $69.6 million.
Update on Genco
Cavalier
As
previously announced, the Genco Cavalier, a 2007-built Supramax vessel, was on
charter to Samsun Logix Corporation, which the Company understands has filed for
the equivalent of bankruptcy protection in South Korea, otherwise referred to as
a rehabilitation application. Charter hire for the Genco Cavalier has been
received up until January 30, 2009. The Company has commenced arbitration
proceedings in the United Kingdom for damages related to non-performance of
Samsun under the time charter. Also, on
February
8, 2009, while the vessel was at safe anchorage in Singapore, it was involved in
a minor collision caused by another vessel in its vicinity. No injuries or
pollution from either vessel have been reported.
Summary
Consolidated Financial and Other Data
The
following table summarizes Genco Shipping & Trading Limited’s selected
consolidated financial and other data for the periods indicated
below.
|
|
Three
Months Ended
|
|
|
Twelve
Months Ended
|
|
|
|
December
31, 2008
|
|
|
December
31, 2007
|
|
|
December
31, 2008
|
|
|
December
31, 2007
|
|
|
|
(Dollars
in thousands, except share and per share data)
|
|
|
(Dollars
in thousands, except share and per share data)
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
INCOME
STATEMENT DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
101,571 |
|
|
$ |
65,690 |
|
|
$ |
405,370 |
|
|
$ |
185,387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage
expenses
|
|
|
1,900 |
|
|
|
817 |
|
|
|
5,116 |
|
|
|
5,100 |
|
Vessel
operating expenses
|
|
|
13,515 |
|
|
|
8,086 |
|
|
|
47,130 |
|
|
|
27,622 |
|
General
and administrative expenses
|
|
|
4,052 |
|
|
|
2,968 |
|
|
|
17,027 |
|
|
|
12,610 |
|
Management
fees
|
|
|
738 |
|
|
|
497 |
|
|
|
2,787 |
|
|
|
1,654 |
|
Depreciation
and amortization
|
|
|
19,942 |
|
|
|
11,600 |
|
|
|
71,395 |
|
|
|
34,378 |
|
Gain
on sale of vessel
|
|
|
- |
|
|
|
(23,473 |
) |
|
|
(26,227 |
) |
|
|
(27,047 |
) |
Loss
on forfeiture of vessel deposit
|
|
|
53,765 |
|
|
|
- |
|
|
|
53,765 |
|
|
|
- |
|
Total
operating expenses
|
|
|
93,912 |
|
|
|
495 |
|
|
|
170,993 |
|
|
|
54,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
7,659 |
|
|
|
65,195 |
|
|
|
234,377 |
|
|
|
131,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(expense) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of investment
|
|
|
(103,892 |
) |
|
|
- |
|
|
|
(103,892 |
) |
|
|
- |
|
Income
from investment
|
|
|
- |
|
|
|
- |
|
|
|
7,001 |
|
|
|
- |
|
Income
(Loss) from derivative instruments
|
|
|
1,935 |
|
|
|
(146 |
) |
|
|
(74 |
) |
|
|
(1,265 |
) |
Interest
income
|
|
|
149 |
|
|
|
729 |
|
|
|
1,757 |
|
|
|
3,507 |
|
Interest
expense
|
|
|
(17,156 |
) |
|
|
(8,847 |
) |
|
|
(52,589 |
) |
|
|
(26,503 |
) |
Other
(expense) income:
|
|
|
(118,964 |
) |
|
|
(8,264 |
) |
|
|
(147,797 |
) |
|
|
(24,261 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(111,305 |
) |
|
$ |
56,931 |
|
|
$ |
86,580 |
|
|
$ |
106,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share - basic
|
|
$ |
(3.56 |
) |
|
$ |
1.99 |
|
|
$ |
2.86 |
|
|
$ |
4.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share - diluted
|
|
$ |
(3.56 |
) |
|
$ |
1.98 |
|
|
$ |
2.84 |
|
|
$ |
4.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - basic
|
|
|
31,229,565 |
|
|
|
28,676,374 |
|
|
|
30,290,016 |
|
|
|
26,165,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - diluted
|
|
|
31,229,565 |
|
|
|
28,825,746 |
|
|
|
30,452,850 |
|
|
|
26,297,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2008
|
|
|
December
31, 2007
|
|
|
|
|
|
BALANCE
SHEET DATA:
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
$ |
124,956 |
|
|
$ |
71,496 |
|
|
|
|
|
Current
assets, including cash
|
|
|
|
|
|
|
140,748 |
|
|
|
267,594 |
|
|
|
|
|
Total
assets
|
|
|
|
|
|
|
1,990,006 |
|
|
|
1,653,272 |
|
|
|
|
|
Current
liabilities, including current portion of long-term debt
|
|
|
|
|
|
|
30,192 |
|
|
|
70,364 |
|
|
|
|
|
Total
long-term debt, including current portion
|
|
|
|
|
|
|
1,173,300 |
|
|
|
936,000 |
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
696,478 |
|
|
|
622,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2008
|
|
|
December
31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
|
|
|
|
|
267,416 |
|
|
|
120,862 |
|
|
|
|
|
Net
cash used in investing activities
|
|
|
|
|
|
|
(514,288 |
) |
|
|
(984,350 |
) |
|
|
|
|
Net
cash provided by financing activities
|
|
|
|
|
|
|
300,332 |
|
|
|
861,430 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
Twelve
Months Ended
|
|
|
|
December
31, 2008
|
|
|
December
31, 2007
|
|
|
December
31, 2008
|
|
|
December
31, 2007
|
|
FLEET
DATA:
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
Total
number of vessels at end of period
|
|
|
32 |
|
|
|
27 |
|
|
|
32 |
|
|
|
27 |
|
Average
number of vessels
(1)
|
|
|
31.0 |
|
|
|
23.0 |
|
|
|
29.3 |
|
|
|
20.4 |
|
Total
ownership days for fleet
(2)
|
|
|
2,855 |
|
|
|
2,115 |
|
|
|
10,711 |
|
|
|
7,434 |
|
Total
available days for fleet
(3)
|
|
|
2,823 |
|
|
|
2,083 |
|
|
|
10,582 |
|
|
|
7,314 |
|
Total
operating days for fleet
(4)
|
|
|
2,772 |
|
|
|
2,054 |
|
|
|
10,461 |
|
|
|
7,220 |
|
Fleet
utilization
(5)
|
|
|
98.2 |
% |
|
|
98.6 |
% |
|
|
98.9 |
% |
|
|
98.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE
DAILY RESULTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time
charter equivalent
(6)
|
|
$ |
35,304 |
|
|
$ |
31,140 |
|
|
$ |
37,824 |
|
|
$ |
24,650 |
|
Daily
vessel operating expenses per vessel (7)
|
|
|
4,734 |
|
|
|
3,824 |
|
|
|
4,400 |
|
|
|
3,716 |
|
(1) Average
number of vessels is the number of vessels that constituted our fleet for the
relevant period, as measured by the sum of the number of days each vessel was
part of our fleet during the period divided by the number of calendar days in
that period.
(2) We define
ownership days as the aggregate number of days in a period during which each
vessel in our fleet has been owned by us. Ownership days are an indicator of the
size of our fleet over a period and affect both the amount of revenues and the
amount of expenses that we record during a period.
(3) We define
available days as the number of our ownership days less the aggregate number of
days that our vessels are off-hire due to scheduled repairs or repairs under
guarantee, vessel upgrades or special surveys and the aggregate amount of time
that we spend positioning our vessels. Companies in the shipping industry
generally use available days to measure the number of days in a period during
which vessels should be capable of generating revenues.
(4) We define
operating days as the number of our available days in a period less the
aggregate number of days that our vessels are off-hire due to unforeseen
circumstances. The shipping industry uses operating days to measure the
aggregate number of days in a period during which vessels actually generate
revenues.
(5) We
calculate fleet utilization by dividing the number of our operating days during
a period by the number of our available days during the period. The shipping
industry uses fleet utilization to measure a company's efficiency in finding
suitable employment for its vessels and minimizing the number of days that its
vessels are off-hire for reasons other than scheduled repairs or repairs under
guarantee, vessel upgrades, special surveys or vessel positioning.
(6) We define
TCE rates as our net voyage revenue (voyage revenues less voyage expenses)
divided by the number of our available days during the period, which is
consistent with industry standards. TCE rate is a common shipping industry
performance measure used primarily to compare daily earnings generated by
vessels on time charters with daily earnings generated by vessels on voyage
charters, because charterhire rates for vessels on voyage charters are generally
not expressed in per-day amounts while charterhire rates for vessels on time
charters generally are expressed in such amounts. Since some vessels were
acquired with an existing time charter at a below-market rate, we allocated the
purchase price between the vessel and an intangible liability for the value
assigned to the below-market charterhire. This intangible liability
is amortized as an increase to voyage revenues over the minimum remaining term
of the charter.
(7) We define
daily vessel operating expenses to include crew wages and related costs, the
cost of insurance expenses relating to repairs and maintenance (excluding
drydocking), the costs of spares and consumable stores, tonnage taxes and other
miscellaneous expenses. Daily vessel operating expenses are calculated by
dividing vessel operating expenses by ownership days for the relevant
period.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, Genco Shipping &
Trading Limited has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENCO SHIPPING &
TRADING LIMITED
DATE: February 27,
2009
/s/ John C.
Wobensmith
John C.
Wobensmith
Chief Financial
Officer, Secretary and Treasurer
(Principal Financial
and Accounting Officer)