Rickmers Maritime Trust

Coz the ships are still on charter...the test comes when they start going off charter.
Hopefully debts vs cashflow better by then.

(27-07-2013, 11:24 AM)opmi Wrote: Coz the ships are still on charter...the test comes when they start going off charter.
Hopefully debts vs cashflow better by then.

thats somewhere in 2016 where most of the charters start expiring...

(27-07-2013, 09:48 AM)propertyinvestor Wrote: Oh results are out....much better than FSL Trust!

I don't think FY 2013 results will be poor. The question will be can dividends be maintained once charter leases start to expire next year ?

2013: 1 vessel expiring (but low charter rates)
2014: 2 vessel expiring
2015: 5 vessel expiring

http://www.rickmers-maritime.com/timeline.html

(Not Vested)

(27-07-2013, 11:44 AM)Nick Wrote:

(27-07-2013, 09:48 AM)propertyinvestor Wrote: Oh results are out....much better than FSL Trust!

I don't think FY 2013 results will be poor. The question will be can dividends be maintained once charter leases start to expire next year ?

2013: 1 vessel expiring (but low charter rates)
2014: 2 vessel expiring
2015: 5 vessel expiring

http://www.rickmers-maritime.com/timeline.html

(Not Vested)

Using the Charter Rates figures from your link and assuming that upon expiry, they can only charter at US$5,700, I estimate the Revenue will be hit -10.1% (2014) & -34.6% (2015) wrt Q213 figures.

IMO, the dam may still hold for 2014 but 2015 will be challenging if Charter Rates don't improve. There's a chance they may slip into a Loss, but there'll likely still be Cash Flow for DPU from the non-cash Depreciation part (assuming the banks are not stopping them). If they survive till 2016, 2 more vessels will be expiring then...

PS. Crystal Ball Gazing only... Have to see what Charter Rates they can get when contracts expires, for a more accurate projection.

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If we were to look at the EGM Presentations (pg18), they must be banking on a recovery in Charter Rates before then.

[Image: 2i07uvs.jpg]

Rickmers dividend yield is sustainable post 2015 assuming charter rates can recover back to 20000k USD / day

Did you factor in the rise in interest payments beginning 2015? If interest payments take a big chunk, the dividend may not be sustainable. Furthermore if they can only secure 20k daily charter, Rickmers may be forced to take a write down on their ships which may threaten their VTL requirement (110%) which is currently stands at approx 100%.

One has to look at first ship to understand that if Rickmers asks for a relaxation of VTL for loan facilities, they may have to cut/suspend dividends if bankers request for that. Understand that VTL has been waived to 2014. but if 2015 comes, who knows what may happen

(28-07-2013, 10:01 PM)CY09 Wrote: Did you factor in the rise in interest payments beginning 2015? If interest payments take a big chunk, the dividend may not be sustainable. Furthermore if they can only secure 20k daily charter, Rickmers may be forced to take a write down on their ships which may threaten their VTL requirement (110%) which is currently stands at approx 100%.

One has to look at first ship to understand that if Rickmers asks for a relaxation of VTL for loan facilities, they may have to cut/suspend dividends if bankers request for that. Understand that VTL has been waived to 2014. but if 2015 comes, who knows what may happen

Would there be a rise in Interest payments? Didnt Rickmers mentioned that the purpose of the rights issue was to preserve and lock in their low interest rates?

Currently approximately 20% of cashflow is being paid out as dividend with the rest being held back to preserve the VTL ratio.

That seems like sufficient buffer?

The bankers at rickmers might have requested that Rickmers have more cash in hand in return for the low interest rates it currently enjoys. Hence the recent rights. The interest rate I am pointing that may rise in 2015 is the macroeconomic condition stemming from the Fed's stimulus withdrawal. In that case, the SIBOR will rise and so will Rickmers interest repayment

As for your point of 20% cashflow, it is true that Rickmers could be paying down its debt in time until 2015 even if there is a write down in its ships, its LTV ratio will be within acceptable range in the bankers' eyes

Rickmers has not been enjoying "low interest rates". It locked in effective interest rates of about 5%+ due to the swaps it took to hedge its floating rate loans. Just take a look at last years interest expense and divide by the amount of debt it had. (its not SIBOR btw, its BBA LIBOR). The high fixed rates are due to the time it took the swap hedges (2006/7 or so).

Curiously enough, they did not want to state the expiry of the swaps when I asked.

However, I note that in the last report, RMT has reported a lowering of interest expense due to expiry of some of its swaps. If interest rates rise, they'd have to rise pretty high to match the 5% rate it locked in. In other words, I expect their interest expense to lower even if LIBOR rises (modestly) as their swaps expire.

As for future charter rates, your guess is as good as mine. I'd like to note however, that container shipping has well known cycles, and we have been in a downcycle for 5 years already (true that it was really bad this time around). As ships get scrapped and weaker players leave the arena, eventually it will come. And when it does, the upcycle (whenever that will be) will be very steep most likely.

If can be so chun on container shipping cycle, buy NOL or MISC liao. Better bet than RIckmers