Euroseas, an owner of 17 feeder and intermediate container ships, has seen a client pull back from one of its highest-paying charters.
The company disclosed on Wednesday it is “pursuing legal action” against Continental Shipping Line, Singapore (CSL), which had the 1,439-teu Aegean Express (built 1997) under charter.
In January, CSL “repudiated its charter as the vessel was completing its scheduled drydock,” Euroseas said in a release of fourth-quarter results.
Euroseas said that it has “entered into negotiations seeking a replacement charter”.
The fleet list on the company’s press release features the Aegean Express as currently “seeking employment”.
In its previous earnings release, the Aegean Express featured as on charter until April 2025, at $41,000 per day.
Euroseas offered no details on the reasons that have led CSL to repudiate the charter.
Some observers, however, have said lately that it was just a question of time before falling container ship markets lead to a revision of charters concluded during the coronavirus bonanza.
Euroseas had clinched the CSL deal for the Aegean Express, its smallest ship, in February 2022.
Being a direct continuation of its then contract, the $41,000-per-day remuneration represented an astonishing 257% pay rise from what the same charterer had been paying before.
Responding to analysts' question after the conference call, Euroseas chief executive officer Aristides Pittas said his company has no other exposure to CSL.
“This is the only ship chartered to this charterer,” he said.
“This is a small charterer with whom we've had quite a long relationship... it's very unfortunate what has happened — we hoped that it wouldn't, but it has,” he said.
No other problems expected
All other ships in the Euroseas fleet are fixed to “much bigger and stronger names”, Pittas said, adding:
“I don't really anticipate any issue with those charterers going forward”.
Most of Euroseas vessels are covered in long-term charters fixed through 2024.
“Our focus over the next two years remains on ensuring smooth operations of our existing fleet to serve our current charter contracts with contracted revenues in excess of $425mn over the next three years,” Pittas said.
Euroseas has nine feeder container ships under construction that will start delivering in March.
The first two, the 2,800-teu Gregos and Terataki (both built 2023) will join its fleet by the end of June and are scheduled to immediately commence three-year charter rates earning $48,000 per day.
Pittas said he was he was “confident” of finding employment for his seven remaining newbuildings as well, shortly before they're delivered.
They wouldn't be fixed at as high a level as the two first ones, “but still at very profitable levels,” he said.
Backed up by such long-term charters, Euroseas saw net income attributable to common shareholders remain broadly stable in the fourth quarter of 2022 at $20.34m, from $22.76m in the same period of 2021.
The company even saw net income for the full year of 2022 more than double from 2021, to $106.2m.
As a result, Euroseas maintained its dividend payment steady at $0.50 per share. The company had resumed paying dividends on common stock in May 2022, after a hiatus of almost nine years.
CSL has been contacted for comment.
