Global Oceanic Carriers Share Discussion Threads

[bruce the goldfish] 11/4/2006 15:33

Some sizeable trades over the last couple of days and the price is still holding so although they are all showing as sells or unknowns it is likely that some are buys imo.

11/04/2006

1.5 million at 46.43p
1 million at 46p
250k @ 46.069p
207k @ 46p
500k @ 47p

10/04/2006

250k @ 47.09p
250k @ 47p
261k @ 46.91p

Anyone any idea as to who is selling and buying? There are obviously some pretty big buyers and sellers out there given the size of the trades. Possibly Globus? other interested third parties?

BTG

[generalcuster] 11/4/2006 08:47

and regarding this new interested party, Globus, i thnk they have very strong credentials. the ceo, Karageorgiou, was a director at the very successful tanker company, Stelmar, and was on the BoD of the Easy Group, so he obviously has a great deal of experience in shipping and the capital markets in general. and the other guy mentioned, Fidakis, seems to own and run a successful listed company in greece, so i'm guessing he has plenty on valuable experience as well as the money to invest.

compare that to Vintiadis, who didn't put any money into the company himself, and whose lack of experience with the capital markets is obvious. if i was one of the major shareholders i'd be furious at him for destroying my investment. i don't think they should be given the opportunity to do further damage at the EGM.

[generalcuster] 11/4/2006 08:38

Calum - I agree about the risk premium and the value of assets being the sum of their cash flows is often wrong - pricing bubbles happen all the time. but there was an interesting article in tradewinds this week about just this point. the bosses at pacific & atlantic produced a financial model which showed that vessels are vastly overvalued at the moment, taking into account there projected discounted cash flows. P&A have just bought a couple of these "overpriced" vessels however, so what does this say about the faith in their model? it will be interesting to see how prices hold up when the BDI starts to slip in the summer.

[calumofthenorth] 10/4/2006 17:54

General,

"future cash flows are, theoretically, in the price of the vessel"

True to an extent, but the vessels will have a risk premium discounted from the price, if you are willing to be the holder of the vessel you will get a higher return from using it (and taking the risk of a market fall) rather than selling it to someone else who is happy to take that risk.

Calum

[generalcuster] 10/4/2006 09:30

Bruce - I got my valuations on a last sale done basis - or from clarkson's estimates where the last sale done was a while back. vessel values have actually picked up over the last month or so but i reckon they will start dropping again going into the summer.

whilst the free cashflow basis may produce a higher valuation for the company I am sure any offer/investment will be done on a net asset value basis. future cash flows are, theoretically, in the price of the vessel. as this company doesn't really have anything of value other than the vessels - management have only succeeded in destroying value - why would you pay more? otherwise, you could just go out to the market and buy the vessels 2nd hand.

[bruce the goldfish] 08/4/2006 09:31

Calum, I must admit a NAV deal is a good one for holders if you are after a quick buck and exit, but I take your point about cashflow. An offer of £16m would only equate to 5 times the expected £3m cash inflow for the year which I agree is meagre. GOC has managed to secure additional charters at pretty reasonable rates given the current market, but you are also right in pointing out the BDI has stabilised around 2,500.

I did study your estimated return post from Motley Fool regarding GOC and even based on your very pesimistic assumptions the return at the current shareprice of 46p was excellent. Therefore, based on the cashflow generative ability of the company I would expect something more in the range of 8 times free cashflows should a third party lodge an offer (independent of the Globus proposition) which would give a cashflow based valuation of closer to £24m or over £1 per share.

I must admit after consideration I personally think that an offer for the company based on free cashflows would be the better option, and per the recent trading update there are a number of potential suitors out there. Goldenport who recently floated may be one of those given that the average age of their fleet is older than GOC's. I am also interested in seeing what Globus feel they can offer the company in terms of any investment.

Whatever happens this has become a very interesting play now and imo could reap some very decent returns in the short to medium term.

BTG

[calumofthenorth] 07/4/2006 22:38

A little bit of digging has brought up the specific law on registers and EGMs in Jersey.

In brief, if you don't want to read the legalese,

1. It is possible to get a copy of the register which is what I'll try and do.

2. An EGM can be requestioned with 10% of the issued share capital and within 21 days of the requisition being submitted the directors must call the meeting within the following 2 months. There should be 14 days notice in writing before an EGM occurs and if it is a special resolution must have 66% of the vote to pass:



45 Inspection of register

(1) The register of members shall during business hours be open to the inspection of a member of the company without charge, and of any other person on payment of such sum (if any), not exceeding the prescribed maximum, as the company may require.

(2) A person may –

(a) in the case of any company, on payment of such sum (if any), not exceeding the prescribed maximum, as the company may require; and

(b) in the case of a public company, on submission to the company of a declaration under Article 46,

require a copy of the register and the company shall, within 10 days after the receipt of the payment and (in the case of a public company) the declaration, cause the copy so required to be available at the place where the register is kept, for collection by that person during business hours.[104]

(3) If inspection under this Article is refused, or if a copy so required is not made available within the proper period, the company is guilty of an offence.

(4) In the case of refusal or default, the court may by order compel an immediate inspection of the register, or direct that the copies required be made available to the person requiring them.

46 Declaration

(1) The declaration required under Article 45(2) or Article 71(3) shall be made in writing under oath and shall state the name and address of the applicant and contain an undertaking by the applicant that no information contained in the copy of the register made available to the applicant will be used by the applicant, or by any person who acquires any such information on behalf of the applicant, or directly or indirectly from the applicant or any such person, save for the following purposes –

(a) to call a meeting of members;

(b) to influence the voting by members of the company at any such meeting;

(c) an offer to acquire all the shares, or all the shares of any class in the company other than shares in which the applicant has directly or indirectly a beneficial interest; or

(d) any other purpose which may be prescribed.[105]

(2) Where the applicant is a body corporate the declaration shall be made by a director of the body corporate and the address given shall be its address for service and where the applicant is an individual the declaration shall state the applicant's residential address.

(3) If any such information is used in a manner inconsistent with the terms of a declaration under paragraph (1) the person who made the declaration is guilty of an offence.

89 Requisition of meetings

(1) The directors of a company shall, notwithstanding anything in the company's articles, on a members' requisition forthwith proceed to call a general meeting or, as the case may be, a meeting of any class of members to be held as soon as practicable but in any case not later than 2 months after the date of the deposit of the requisition.[159]

(2) A members' requisition is a requisition of members of the company holding at the date of the deposit of the requisition not less than one-tenth of the total voting rights of the members of the company who have the right to vote at the meeting requisitioned.[160]

(3) The requisition shall state the objects of the meeting, and shall be signed by or on behalf of the requisitionists and deposited at the registered office of the company, and may consist of several documents in similar form each signed by or on behalf of one or more requisitionists.

(4) If the directors do not within 21 days from the date of the deposit of the requisition proceed duly to call a meeting to be held within 2 months of that date, the requisitionists, or any of them representing more than one half of the total voting rights of all of them, may themselves call a meeting, but a meeting so called shall not be held after 3 months from that date.

(5) A meeting called under this Article by requisitionists shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by directors.

(6) Reasonable expenses incurred by the requisitionists by reason of the failure of the directors to call a meeting shall be repaid to the requisitionists by the company, and sums so repaid shall be retained by the company out of sums due or to become due from the company by way of fees or other remunerations in respect of their services to the directors who were in default.

(7) In the case of a meeting at which a resolution is to be proposed as a special resolution the directors are deemed not to have duly called the meeting if they do not give the notice required for special resolutions by Article 90.

90 Definition of special resolution

(1) A resolution is a special resolution when it has been passed by a majority of not less than 2/3rds of members who (being entitled to do so) vote in person, or by proxy, at a general meeting of the company or at a separate meeting of a class of members of the company of which in either case not less than 21 days' notice, specifying the intention to propose the resolution as a special resolution, has been duly given.[161]

(2) If it is so agreed by a majority in number of the members having the right to attend and vote at such a meeting upon the resolution, being a majority together holding not less than 95% of the total voting rights of the members who have that right, a resolution may be proposed and passed as a special resolution at a meeting of which less than 21 days' notice has been given.[162]

(3) At a meeting at which a special resolution is proposed, a declaration by the chairman that the resolution is carried is, unless a poll is demanded, conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.

(4) In computing the majority on a poll demanded on the question that a special resolution be passed, reference is to be had to the number of votes cast for and against the resolution.

(5) For the purposes of this Article, notice of a meeting shall be deemed to be duly given and the meeting duly held, when the notice is given and the meeting held in the manner provided by this Law or the company's articles.

(6) References in this Law to a special resolution are, unless otherwise expressly provided, references to a special resolution passed at a general meeting of the company.

[Abuse team] 07/4/2006 19:42

Post removed by ADVFN

[nockybalboa] 07/4/2006 19:41

www.fairshare.biz strikes again the company are unbelievable, I only post this because they deserve the small fee they charge for priceless friendly information

[calumofthenorth] 07/4/2006 16:56

Hi Bruce,

It's all very murky with these announcements so I've been trying to stitch together what exactly is going on. Is Globus the only interested party or are there others, is there a creeping control situation developing?

"We understand that a major GOC shareholder has lodged a valid requisition with
the company for an EGM that would replace the Board and instigate the process
described above."

An EGM requires 21 days notice (I assume this is the same under Jersey Law) so assuming the EGM proposal goes ahead we should get some more info and a bit of direct director comment. Is this the Globus proposal or one of the "number of approaches from third parties that wish to assist in developing the business"

With regards to an offer of winding up, I think a NAV return is a very bad deal, it may mean a nice profit for most of us but it means forsaking a much larger profit if we could get the free cash flow of the company. Considering the company will likely generate £3m this calender year an offer of £16 is very stingy. However, I would draw attention to the sentence in the GOC release which states:

"The Directors, in conjunction with its advisers, are carefully
considering each of these approaches in terms of achieving a fair operational
and Net Asset Value for GO Carriers."

Therefore, I think any such offer reflecting the operational value should be at a level above £16m, hopefully around £20m and maybe higher. Bearing in mind the $40m valuation may have been made when it was thought the BDI would continue its fall whereas it appears to have stabilised around 2,500.

If I had to guess I think the Combined Code comment has come from GOC assuming they would be covered (as stated in the listing prospectus) and Globus saying "erm, no you ain't" hence:

"Following correspondence with The Panel on Takeovers and Mergers (the "Panel"),the Company has been informed that the Panel does not believe that the City Code on Takeovers and Mergers or the Rules Governing Substantial Acquisitions of Shares applies to the Company owing to the fact that at the current time the central management of the Company is located outside of the UK, Channel Islands and the Isle of Man."

I tried getting a shareholder register through Abchurch but they said no, as I have nominee shares it'll be difficult to write to the company to force disclosure and I'm not sure if it's even possible under Jersey Law. I'm interested in seeing what the conditions are for the 10% of options held by the directors (still waiting for a response on that one), if they can exercise them now they may be in a good position to influence any offer.

Calum

[bruce the goldfish] 07/4/2006 15:49

GC - on what basis do you arrive at your valuations for the GOC fleet?

The directors announced in January that they believed that the value of the fleet was in excess of $40 million, not sure on what basis this estimate is made or whether they actually had an independent valuation carried out at that time. In the trading update yesterday they announced that they had carried out independent valuations on the fleet and that the shares are trading at a significant discount to NAV.

I suppose it depends what constitutes "significant" in terms of an undervaluation. It would have been useful for the shareholders and potential investors if the directors had clarified in the trading update the recent independent valuation of the fleet.

Calum if you are around - what are your thoughts on the trading update and today's announcement.

BTG

[generalcuster] 07/4/2006 14:43

Bruce - I agree with you that GO is trading at a discount to NAV, but I think the discount is maybe a bit less than you suggested. Based on recent sales, and being generous, I think the 1993 Panamax is worth about $21 million, the 1984 Panamax about $9 million and the 1982 Handymax is worth $6 million - totalling $36 million. Take off the net debt of $15 million and there is a NAV of $21 million. This equates to about $1 per share or 59 pence per share.

This is a healthy discount but would a special dividend, after liquidation costs, give much more back than the value of the shares today. Perhaps some new investment and new management could really add value to this company.

[grippa] 07/4/2006 13:36

The directors and people behind this company make me sick. Once again a small group of Greek shipowners have shown their true colours as crooks to the financial markets. Float the company way over valued at £1.4 per share. Buy the ships off an owner behind the public company (who shall remain nameless) shrowded in secrecy. Agree to buy the forth ship at a hugely exagerrated price, when it doesnt go through give him $1m and 2,000,000 odd shares (cant remember exact number) and he gets to keep his ship!!! Then sit and wait, watching the price go down from 140p to under 40p in only a few months...THEN SURPRISE SURPRISE the comapny receives a bid...BUT BY WHO??????????? could it possibly be the same people that sold GOC the ships in the first place????? Could it be an owner bidding on behalf of the directors????? THIS STINKS OF MANIPULATION, and I for one am furious that they have been allowed to do this again and once again ruin the reputation of greek shipowners. I said it from day one that this was a fully one sided investment, only the directors and company would benefit, and the poor shareholders (who admittedly should have done their homework better) get left with almost nothing. Congratulations Global Oceanic...well done! Urghhhh

[omalaha] 07/4/2006 12:15

Bruce - while accepting your NAV per share calculation, I think Papal has a point regarding a third party valuation and "this is not a UK company and is registered outside the UK, so strange things can happen and there is little recourse with AIM stocks like this." I would say things look dangerously interesting!!

[bruce the goldfish] 07/4/2006 11:07

I must admit that I did take a position in GOC at sub-40p the other day after tracking the company for a while post floatation. The dwindling share price was always a concern even if I did like the look of the cash generative nature of the company and the fact that it traded at a substantial discount to its NAV.

I would personally favour the winding-up of the company and returning the cash to shareholders in the form of a special dividend as the company does trade at a significant discount to NAV as announced yesterday.

At the interims the NAV of GOC was $42.6 million (c. £23.5 million at forex rate of $1.81/£ @ 30/09/05) of which $62.6 million was the carrying value of the 3 vessels. However, the directors announced on 5 Jan 2006 that the fleet had been independently valued at in excess of $40 million.

With a fleet value of say pessimistically $40 million and net debt of $15.5 million (as announced yesterday) this gives an estimated NAV of circa $24.5 million (c. £14 million based on today's forex rate of $1.75/£).

With shares in issue of 20,404,595 and a NAV of £14 million this equates to a NAV per share of 68.6p. A substantial discount to the current share price.

I actually wonder whether the investor that has requisitioned the EGM is an asset raider (possibly Ian Barclay who announced in early March 2006 a shareholding of 815,000 shares – which represents approx 4.3% of the issued share capital of GOC).

BTG

[papalpower] 07/4/2006 10:50

Gumberr do not know, however it has to be remembered this is not a UK company and is registered outside the UK, so strange things can happen and there is little recourse with AIM stocks like this.

Just be careful thats all I would say, it could be a nice jackpot, it could also not be.

[gumberr] 07/4/2006 10:47

Thanks jonwig!

[jonwig] 07/4/2006 10:45

GUMBERR,
There's some excellent analysis earlier in the thread about the nav of the company - worth a read.

[gumberr] 07/4/2006 10:42

PapalPower -How much per share do you thing shareholders could get?
It'll be well above the current price imo.

[gumberr] 07/4/2006 10:33

The directors have already hinted that this is at a significant discount so all bodes well.

[papalpower] 07/4/2006 10:28

gumberr, now that depends on the


"Our approach suggested a route by which a new Board would use independent third parties to value the GOC fleet and within 6 weeks of the Board's appointment would return to shareholders"

[papalpower] 07/4/2006 10:27

omalaha, hostile activity.

On KIB if you look at the chart, its was hostile the price crash, and then BLZ started buying up and managed to oust the board.

Someone has taken the GOC share price down same as KIB, and now most likely the board will be ousted.

[gumberr] 07/4/2006 10:24

Well they have stated that this is at a discount to the company's asset value so an offer of 70p+ to the shareholders should do fine.

[omalaha] 07/4/2006 10:07

Papal - could you expand on that please..cheers

[bruce the goldfish] 07/4/2006 10:04

I am slightly confused as to the bit where it says:-

"We understand that a major GOC shareholder has lodged a valid requisition with the company for an EGM that would replace the Board and instigate the process described above"

What process is that? the winding-up of the company and returning the cash to the shareholders? or the new investment from Globus?

BTG