Genco Shipping suspends dividend, saves ships!

Posted by Tim

January 27, 2009

Genco Shipping and Trading Limited – Press Release.

Genco Shipping (GNK: 21.25 0.00 0.00%) has suspended their dividend and stock repurchase program in exchange for an easing of the collateral requirements on their credit facility. At first glance this seems like a prudent move because it avoids lender problems due to the breaking of loan covenants and the credit facility has enough credit available to pay for the 3 new-build Capesize vessels that will be coming on in the next 2 quarters.

The $1.00 per share quarterly dividend amounts to about $31.5 million which almost the last quarter’s total expenses. Total 3rd quarter revenues were $107 million for comparison.

The press release stated that the dividend and share repurchase cannot resume until the collateral requirements for the credit facility are again being met. It may be a while before they resume the dividend. Genco has several ships coming off contract in the second half of 2009 and the 3 new Capesize to find homes for.

The market is taking the news in stride and the shares have only fallen about 3%. I will be standing on the sidelines watching GNC for the next few quarters as they work to put their out-of-work bulk carriers to work.

Note: GNK is a component of this site’s hypothetical Opportunities Portfolio, but not for long.