SOURCE: Genco Shipping & Trading Limited

August 23, 2005 16:15 ET

Genco Shipping & Trading Limited Announces Acquisition of Handymax Drybulk Carrier

Vessel Trading on Favorable Time Charter; Expected to Provide $0.16 EPS Accretion for 2006

NEW YORK, NY -- (MARKET WIRE) -- August 23, 2005 -- Genco Shipping & Trading Limited (NASDAQ: GSTL) today announced that it has agreed to acquire the Western Muse, a 48,913 dwt Handymax drybulk carrier, from Western Bulk PTE LTD. The transaction is subject to customary closing conditions and is expected to be completed by October 2005.

Genco is to acquire the 2001 Japanese-built vessel for $34.5 million and plans to rename the vessel the Genco Surprise. Genco will finance the purchase through borrowings on its $450 million revolving credit facility. The vessel is trading on a $26,500 per day time charter with Qatar Navigation QSC. with a minimum term that expires September 1, 2007. Management expects the vessel to contribute $4.1 million to net income in 2006 and provide $0.16 accretion to earnings per share for the year based on assumptions discussed in the last paragraph of this release.

Robert Gerald Buchanan, President, commented, "Following the completion of our initial public offering in July, we are pleased to have entered into an accretive vessel acquisition that expands both our fleet and earnings potential. By growing our fleet, the Company has further enhanced its position for taking advantage of the favorable long-term fundamentals of the drybulk industry. At the same time, we have increased both our time charter coverage and the average rate earned by our fleet in an effort to provide shareholders with strong and stable earnings. Going forward, we intend to continue to draw upon our significant financial flexibility as we seek to further consolidate the fragmented drybulk industry."

With the addition of this most recent Handymax vessel, Genco's fleet will consist of five Panamax, seven Handymax and five Handysize drybulk carriers, with a total carrying capacity of approximately 839,000 dwt and an average age of 8 years. Fifteen of the Company's seventeen vessels will be on time charter contracts with an average remaining life of 1.3 years as of August 23, 2005. For 2006, 77% of the Company's available days will be secured on time charters at rates above the current market.

About Genco Shipping & Trading Limited

Genco Shipping & Trading Limited transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes. Genco currently owns a fleet of 16 drybulk carriers, consisting of five Panamax, six Handymax and five Handysize vessels, with a carrying capacity of approximately 790,000 dwt.

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward-looking statements contained in this report are the following: (i) changes in demand or rates in the drybulk shipping industry; (ii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iii) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (iv) changes in rules and regulations applicable to the cargo industry, including, without limitation, legislation adopted by international organizations or by individual countries and actions taken by regulatory authorities; (v) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, repairs, maintenance and general and administrative expenses; (vi) the adequacy of our insurance arrangements; (vii) changes in general domestic and international political conditions; (viii) changes in the condition of the Company's vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; (ix) the company's acquisition or disposition of vessels and other factors listed from time to time in our public filings with the Securities and Exchange Commission including, without limitation, the Registration Statement on Form S-1, as amended, for our initial public offering (see Registration Statement No. 333-124718) and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005. Our ability to pay dividends in any period will depend upon factors including the limitations under our loan agreements, applicable provisions of Marshall Islands law and the final determination by the Board of Directors each quarter after its review of our financial performance. The timing and amount of dividends, if any, could also be affected by factors affecting cash flows, results of operations, required capital expenditures, or reserves. As a result, the amount of dividends actually paid may vary.

Our estimates of the new vessel's contribution to net income and earnings per share for 2006 assume: (i) timely delivery of the vessel in good condition and its operation under its current time charter during 2006; (ii) no change in the current number of shares outstanding; (iii) actual direct vessel operating expenses in line with management's estimates and budgets submitted by our technical manager, Wallem; (iv) no material increase in general and administrative expense as a result of the acquisition; (v) actual management fees for technical management at the contracted rate of $6,800 per month per vessel; (vi) scheduled dry docking of this vessel in 2006; and (vii) increased depreciation and interest expense based on the purchase price and borrowings described above and an assumed LIBOR rate of 4.0%. Actual results may vary.

Contact Information

  • CONTACT:
    John C. Wobensmith
    Chief Financial Officer
    Genco Shipping & Trading Limited
    (646) 443-8555