New York-listed Genco Shipping & Trading has won a $450m refinancing of existing credit facilities in another key element of its new low-debt, high-dividend strategy.
The refinancing was one of a raft of developments disclosed by John Wobensmith-led Genco as it celebrated its best quarter since 2010, albeit slightly missing even higher expectations from equity analysts.
Genco also locked away three ultramaxes on two-year charters that previously had been hard to find in the dry bulk sector, lending further support to the dividend-payout plan through predictable income streams.
And the Manhattan-based owner is forging a new joint venture with The Synergy Group for technical management of the fleet, serving withdrawal notices to current managers Anglo-Eastern and Wallem Shipmanagement.
The action-packed quarter saw Genco record net income of $32m, or $0.76 per share, just a penny shy of the consensus estimate of Wall Street analysts. This reversed a net loss of $18.2m or $0.43 per share from the second quarter of 2020, as revenue climbed to $121m from $74.2m.
Genco's best quarter in 11 years has been followed by even stronger fixtures in the current quarter. Second-quarter time charter equivalent (TCE) rates were up 73% from the first quarter, but have increased a further 31% in third-quarter bookings to date.
Capesize rates were $23,760 for the first quarter but $31,304 with 66% of days booked in the current quarter. Ultramax and supramax averages of $19,215 jumped to $25,273 with 75% of days booked.
In addition, Genco appear to confirm a TradeWinds report from July that it had acquired three Navigare Capital Markets secondhand ultramaxes.
TradeWinds reported Genco had paid around $72m for the Chinese-built trio: the 63,000-dwt Navigare Bellus, Navigare Beatus (both built 2017) and the Navigare Bonitas (built 2014).
They have been renamed Genco Madeleine, Genco Constellation and Genco Mayflower.
In its headline refinancing, Genco said it will retire existing credit facilities of $495m and $113m. The new facility will feature a 5-year term loan of $150m and a revolving credit facility of up to $300m. Pricing is between Libor plus 215 basis points and 275 basis points with no restrictions on dividends. Lenders were not identified.
“The foundation of our value strategy, which was announced in April, is our strong balance sheet and capital structure. Our recently agreed upon global credit facility refinancing further enhances Genco’s capital structure, providing additional flexibility, reducing our cash flow breakeven rates to industry lows, and supporting sustainability of quarterly dividends through diverse market environments,' Wobensmith said in an earnings statement.
"Additionally, we continued to opportunistically expand our fleet at a unique point in the cycle, seeking to capture the disconnect between decade high freight rates and asset values that have yet to catch up, which has resulted in compelling return on capital opportunities."
On the charter front, the owner has fixed two vessels for between 20 and 23 months. These are the 63,400-dwt Genco Freedom (built 2015) at $23,375 per day and 63,500-dwt Baltic Hornet (built 2014) at $24,000 per day.
It also fixed 63,300-dwt Baltic Wasp (built 2015) between 23 and 25 months at $25,500 per day.
