Genco Shipping & Trading Ltd (GNK) 2007 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited's second quarter 2007 earnings conference call and presentation. Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained at Genco's website at www.gencoshipping.com. To inform everybody, today's conference is being recorded and now being webcast at the Company's website, www.gencoshipping.com. We will conduct a question-and-answer session after the opening remarks. All instructions will follow at that time. A replay of this conference will be accessible any time during the next two weeks through August 16, 2007 by dialing 888-203-1112 for US callers, and 719-457-0820 for those outside the US. To access the replay, please enter the pass code 427-8064.

At this time, I'd like to turn the conference over to the Company. Please go ahead.

Good morning. Before we begin our presentation, I note that in this conference call we will be making certain forward-looking statements that discuss future events and performance. Thee statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. For discussion of factors that could cause results to differ, please see the Company's press release that was issued yesterday. The materials relating to this call posted on the Company's website and the Company's filings with the Securities and Exchange Commission including without limitation the Company's annual report on Form 10-K for the year ended December 31, 2006 and the Company's subsequent reports on Form 10-Q and Form 8-K filed with the SEC.

At this time, I would like to introduce Mr. Gerry Buchanan, the President of Genco Shipping & Trading.

Good morning, and welcome to Genco's second quarter of 2007 conference call. With me today is Peter Georgiopoulos, our Chairman, and John Wobensmith, our Chief Financial Officer.

As outlined on slide three of the presentation, I will begin today's call by discussing the highlights of the quarter followed by John's review of our financial results for the three-month period ended June 30, 2007. Following this, I will discuss the industry's current fundamentals. John, Peter and I will then be happy to take your questions.

During the second quarter, Genco continued to fix vessels and long-term time plane charters at rates equal to or above previous levels by utilizing noninterest expertise and taking advantage of the favorable long-term fundamentals of the drybulk industry. In accomplishing this objective, Genco was able to declare a sizable dividend while maintaining its financial strength to further expand the Company's fleet.

I will begin my discussion of the quarter on page five. We recorded a net income of $13.7 million or $0.54 basic undiluted earnings per share for the three months ended June 30, 2007. Excluding the loss of 1.6 million from our foreign exchange swap agreements, which John will discuss later on in the call in more detail, we recorded net income of [$15.3] million or $0.61 basic and $0.60 diluted earnings per share. Our results for the three months ended June 30, 2007 enabled Genco to declare a second quarter dividend of $0.66 per share, which represents the eighth dividend overall since going public in July, 2007.

Building on our success and actively consolidating the drybulk industry, as we have since our inception in 2004, we agreed last month to acquire nine Capesize vessels from companies within the Metrostar Management Corporation group for an aggregate purchase price of approximately $1.1 billion. This acquisition will be financed for our new $1.4 billion revolving credit facility, which John will also discuss in more detail later in the call.

At the core of Genco's strategy is the Company's goal to both grow via strategic acquisitions and distribute sizable dividends. In staying true to this approach, we remain well positioned to further enhance our leading reputation in the drybulk industry and deliver significant value to shareholders over both the near-term and the long-term.

I would also like to highlight two additional accomplishments in the second quarter. First, we transferred our common stock listing to the New York Stock Exchange on April 11. We also established an ownership position in Jinhui Shipping and Transportation Limited.

Moving to slide six, I will discuss our continued success in the execution of our operating strategy. During the three months ended June 30, 2007, we signed the Genco Knight, a 1999-built Panamax to long-term time charter for 23 to 25 months at a gross rate of $37,700 per day. Of note, this represents a 30% increase from the previous charter. We also signed the Genco Beauty, 1999-built Panamax vessel to a long-term time charter for 23 to 26 months at a gross rate of $31,500 per day. Both charters commenced at their respective accretive levels during the second quarter.

As of June 30, 2007, all the vessels in our current fleet are long-term charters with an average duration of approximately 14 months. Based on our considerable success throughout the first half of 2007 and securing significant time charter coverage for our fleet, we currently have approximately 90% of our current fleet's available base secured by contracts for the remainder of 2007 and 50% for 2008.

Going forward, we will maintain our focus on employing a large portion of the fleet on time charters and providing leading charters with service that meet and exceed their exacting requirements.

Turning to page seven of the presentation, we provide an overview of the nine Capesize vessels. The nine vessels which range from 170,500 deadweight to 180,000 deadweight will expand our fleet by 159% on a tonnage basis to a total carrying capacity of approximately 2,559,000 deadweight. By acquiring the largest class of drybulk vessels, this transaction significantly enhances our earnings power and strengthens our ability to benefit from strong demand for core commodities such as iron ore and coal in China and other developing countries.

Two of the vessels, the Genco Augustus and the Genco Tiberius are currently in the water. Both were built in January 2007 and are expected to be delivered to Genco in the third quarter of 2007. The seven remaining vessels are all new buildings which are scheduled to be delivered between the fourth quarter of 2007 and the third quarter of 2009. Upon completion of the acquisition, Genco will own a fleet of 28 drybulk vessels consisting of nine Capesize, seven Panamax, seven Handymax and five Handysize drybulk carriers with an average age of eight years, well below the industry average.

Of note, four of the nine Capesize vessels are already secured in long-term contracts with multinational charters, effectively strengthening our position to provide shareholders with significant revenue and earnings visibility while maintaining the opportunity to capitalize on strong freight market. We will concentrate our efforts in securing the five Capesize vessels on long-term time charters at attractive rates. And in doing so, further strengthen our ability to distribute sizable dividends to shareholders.

At this time, I'd like to turn the call over to John.

Thank you, Gerry. I will begin my remarks by directing you to slide nine which presents our second quarter and six month 2007 financial results. For the second quarter and six-month period ended June 30, 2007, we recorded revenues of $36.8 million and $74.1 million, respectively. This compares with revenues for the second quarter and six-month period ended June 30, 2006 of $32.3 million and $64.9 million, respectively. The increase was due to the operation of a larger fleet.

Operating income for the second quarter and six-month period was $18.5 million and $40.8 million, respectively. This compares with the operating income for the second quarter and six-month period ended June 30, 2006 of $17.3 million and $35 million respectively. The increase in operating income is attributable to higher revenues which was partially offset by higher operating expenses as well as higher general and administrative expenses.

Our interest expense for the second quarter of 2007 was $4.1 million and $7.6 million for the six-month period ended June 30, 2007, which compares to $2.2 million for the second quarter of 2006 and $4.4 million for the six months of 2006. Interest expense for the second quarter of 2007 includes the additional drawdowns on our short-term line for the purchase of Jinhui's capital stock, which I will discuss in more detail later on the call.

Net income was $13.7 million or $0.54 basic and diluted earnings per share for the second quarter of 2007, and $33.6 million or $1.33 basic and $1.32 diluted earnings per share for the six-month period ended June 30, 2007.

Excluding the loss with respect to our foreign exchange swaps related to the Jinhui stock purchase, net income totaled $15.3 million or $0.61 basic and $0.60 diluted earnings per share for the three months ended June 30, 2007. The foreign exchange swaps are being used to hedge our exposure to the Norwegian kroner related to our purchases of Jinhui's stock. The $1.6 million loss is offset by a gain this quarter of $1.9 million recorded in shareholders equity as a component of other comprehensive income or OCI, but is not reflected in the income statement. Return on capital on a rolling 12 months ended June 30, 2007 was approximately 15%.

Moving to slide 10, you will see that we continued to maintain a strong balance sheet as we distributed sizable dividends. Our cash position was $67.8 million as of June 30, 2007 and our net debt to capital ratio was 35.7%. Our total assets as of June 30, 2007 was $689.6 million and consisted primarily of our current fleet, cash and Jinhui common stock. Our EBITDA for the three month period ended June 30, 2007 was $25.4 million, representing an EBITDA margin of 69% of revenues.

Moving to slide 11, our utilization rate was 98% for the second quarter of 2007 and 98.2% for the six-month period ended June 30, 2007. As we stated on our July conference call, the Genco Trader incurred 27 days of unscheduled off-hire related to maintenance during the second quarter of 2007 as we had previously announced on our first quarter 2007 earnings call. Based on preliminary estimates, we expect that we will be reimbursed an approximate amount of $500,000 by our insurance coverage, but revenue is not recognized until the insurance proceeds have been received.

The Genco Prosperity, a 1997-built Handymax vessel, recorded six days of unscheduled off-hire time and all other unscheduled off-hire time totaled approximately $265,000 during the second quarter of 2007. Our time charter equivalent rate for the second quarter of 2007 was $21,046 versus $20,315 recorded in the second quarter of 2006. This increase was due to our past decision to fix our vessels on long-term charters that rates equal to or above previous levels.

As Jerry discussed earlier on the call, both the Genco Beauty and the Genco Knight achieved higher charter rates during the second quarter of 2007. In addition, the Genco Prosperity commenced a time charter during the second quarter of 2007 at a higher rate versus the same period in 2006. The increase was countered by lower charter rates achieved in the second quarter of 2007 versus the second quarter of 2006 for the five Handysize vessels on charter with [larts] and bulkers, which commenced their time charter contracts at $13,500 per day per vessel during the third quarter of 2006. The five Handysize vessels will commence at higher rates of $19,500 per vessel per day on September 5, 2007.

For the second quarter of 2007 our daily vessel operating expenses were $3,727 per day versus $3,042 per day for the second quarter of 2006. Of note, our daily vessel operating expenses for the first half of 2007 is within our 12 month budget of $3,682 per day as we continue to maintain our focus on cost-effective operations.

On slide 12 we present a pro forma balance sheet that reflects the Company's payment of its second quarter 2007 dividend of $0.66 per share. The Company's acquisition of capital stock of Jinhui Shipping and Transportation Ltd. The drawdown of 178.25 million on July 24 for the deposits on the nine Capesize vessels related to the Metrostar acquisition. The future drawdown of $225 million which represents the remaining 90% payment for the Genco Augustus and the Genco Tiberius, the first two ships expected to be delivered in August. And lastly the use of $4.1 million of cash for the acquisition of additional shares of Jinhui in July of 2007. As you can see, our pro forma cash position for the quarter is $46.9 million. As of June 30, 2007, our pro forma liquidity totaled $737.4 million and our net debt to capital ratio was 63%.

Before moving on to our dividend policy, I will now briefly discuss our quarterly breakeven levels.

Since we do not have firm delivery dates for the two Capesize vessels to be delivered in the current quarter, we are not presenting updated breakeven numbers for the third quarter of 2007 at this time. We plan to provide updated breakeven numbers once we take delivery of both vessels which are anticipated in mid August. For modeling purposes, we note that the budgeted daily vessel operating expenses for the nine Capesize vessels to be acquired are expected to be $4,800 per day per vessel, while our budget for our current fleet remains the same at $3,682 per day per vessel.

In addition, our interest expense is expected to increase due to the additional drawdowns on our credit facility for the remaining balance of the $112.5 million for each of the two vessels scheduled to be delivered in the third quarter as previously disclosed on Form 8-K on July 19, 2007.

Next, I will briefly discuss our dividend policy provided on slide 13. As Jerry stated earlier, we declared a second quarter dividend of $0.66 per share, our third consecutive dividend under our new quarterly target rate for 2007. Based on our closing price yesterday of $55.73 plus the cumulative dividends of $4.98 per share that we have declared to date, we have provided shareholders who invested in our IPO in July of 2005 a total return of approximately 189%.

Our dividend policy which is determined by our Board of Directors and is calculated based on free cash flow less cash reserves for fleet maintenance, renewal and growth and debt amortization provide significant benefits to shareholders. During a time when Genco continued to distribute sizable dividends, we once again drew upon our financial strength in order to acquire nine Capesize vessels. In seeking to position our Company as the industry bellwether, this acquisition reflects management's unwavering commitment to capitalize on strategic acquisitions that meet our strict criteria related to earnings and cash flow accretion as well as return on capital hurdles.

We plan to finance the acquisition of nine Capesize vessels through borrowings under our new $1.4 billion revolving credit facility. The new facility underscores management's successful track record in execution under our growth strategy. Underwritten by DnB NOR Bank, the revolving credit facility has a 10 year term and allows Genco to borrow up to $1.377 billion with amounts borrowed under the credit facility bearing interest at LIBOR plus .80% through the fifth anniversary and .85% thereafter.

In addition to the purchase of the nine Capesize vessels, we have used proceeds from the new credit facility to retire our $550 million facility and our $155 million short-term revolving line. As a result, we expect to realize a non-cash expense of $3.6 million during the current third quarter related to the write-down of unamortized deferred financing costs related to our previous credit facilities.

Our strong financial position supported by our new credit facility improves management's ability to capitalize on growth opportunities that create long-term value for the Company and its shareholders. In meeting this important objective we remain dedicated to seeking to distribute sizable dividends to shareholders as we have consistently done since going public.

Before I turn the call back over to Gerry to discuss the industry fundamentals, I will now provide an update on our ownership position in Jinhui Shipping and Transportation Ltd., a drybulk shipping owner and operator focused on the Supermax sector of drybulk shipping.

Following the announcement of our initial position in the Company on May 2, 2007, our current position in Jinhui is 14,546,400 shares equaling 17.31% of the outstanding shares in votes of Jinhui's capital stock. The total debt level related to the Company's purchase of Jinhui's capital stock is currently $77 million. Based on Jinhui's closing price on August 1, 2007, of 67.75 kroner, we have an unrealized gain of $57.8 million. Genco may purchase additional shares of Jinhui's capital stock or dispose of any and all shares of Jinhui's capital stock that Genco holds whether through open market transactions, privately negotiated transactions or otherwise.

I will now turn the call back to Jerry.

Thank you, John. I will now take the opportunity to spend a few moments discussing the industry fundamentals. I will start with slide 15 which points to the drybulk index. Representative on the slide are the overall Baltic dry index, the Baltic Capesize index and the Baltic Panamax index. As can be seen when looking at the first half of 2007, the rate environment has displayed a significant increase since the beginning of the year, reaching 5,500 points for the first time since December 2004. Of note, although the PDI movement was led by record levels of Capesize spot rates, the correlation between the aforementioned in the Panamax rates is evidenced by the almost parallel increase on the BPI index.

Moving on to slide 16, we will discuss the drivers of this robust market. As indicated on the graph of the bottom left, Chinese steel production grew to 238 million tons for the quarter ending June 30, 2007, while 188 million tons were imported into China for the same period. For the first half, Chinese steel production grew by 19% and iron ore imports grew by 18% year-over-year.

One of the factors currently driving the REIT market has been Australian coal port congestion. June's severe weather in Australia had until recently pushed up coal port delays at record levels reaching 23 days at its peak. As expected, following declarations of force majeure by the mining companies, (inaudible) at Newcastle was temporarily suspended and quotas were reset. Currently, congestion has eased slightly to 19 days for the coal ports while the combined port delays, that is coal and iron ore ports, are reported at about 12 days.

Moreover, along with China's developing economy comes its increasing energy needs. In an effort to satisfy the country it has become a net importer of coal while also taking vessels out of the international markets through its increased Cabotage trade activity. Looking at the graph on the bottom right hand side we can see that the drybulk (inaudible) by quarter through 2011.

The order book over the next few years provides good visibility over the medium-term charter market. Furthermore, albeit the scheduled deliveries for late 2009 and into 2010 seem to have increased over the last couple of quarters, we believe that projected continuous growth in demand as well as the aging drybulk fleet at potential scraping bode well for the drybulk industry. As of June 30, 2007 the drybulk fleet grew by approximately 4%. Firm freight rates through the first quarter helped maintain scrapping levels at minimum with only eight Handysize, one Handymax and one Panamax vessel reported as scrapped for the first half of 2007.

On slide 18, we detailed the long-term drybulk demand fundamentals which we believe remain strong for the following reasons. Increases in China's GDP continued its strong rates, reaching an annual growth rate of 11.9% for the second quarter of 2007 and 11.5% for the first half of 2007; on pace for its fastest growth rate since 1994.

India's GDP growth for 2006 reached 9.4%, higher than previously revised estimates of 9% and beating last year's growth rate of 8.5%. Furthermore, the IMF recently revised its 2007 growth estimate up to 9% driven by economic growth. Private as well as public investment in infrastructure is starting to take place with increased spending reported in both the energy and transportation sectors. World GDP growth for 2006 came in at 5.4% while growth is forecast at 4.9% for 2007. A major driver of this growth is the Asian economies.

Finally, if we look at the graph on this slide, we can see that China has overtaken Europe and Japan as the largest importer of major bulks, accounting for approximately 21% of the world's imports. When looking at the same data for 1998, Chinese imports accounted for only 6% of the world trade. As China continues to rely on long haul trade routes from Brazil and Australia for its iron ore needs, (inaudible) demand is expected to grow.

What will drive the market going forward? On slide 18, we point out what we believe to be the favorable fundamentals of the industry. Although iron ore imports into China's slowed during the second quarter of 2007, strong steel production combined with expectations of high iron ore contract prices for 2008 bode well for a sustained strong rate environment. As previously mentioned, Australia's failure to satisfy demand growth has caused record levels of delays in both the iron ore and coal ports. While Australia's solution of imposing cooler systems is expected to ease congestion, demand for the coal remains strong and coal will have to be sourced from other locations, such as the United States and Canada. Moreover, along with China's developing economy comes its increasing energy needs. In an effort to satisfy demand, the country has recently become a net importer of coal. While indicative is the fact that combined [thermal] and coking coal imports were up 48% for the first half of 2007 as compared to the same period last year.

India's economic growth is serving the drybulk industry by adding further pressure to the coal trades in two ways. Firstly, this increased steel production is forcing the country to become a major importer of coking coal. Secondly, this increased energy (inaudible) will result in higher (inaudible) coal imports.

Over 30% of the world fleet is 20 years or older while approximately 15% is 25 years or older. As we have indicated on past calls, unlike (inaudible), bulk carrier scrapping is not mandated. It is more of an economical equation and the cost of repair to comply with requirements for a fifth or sixth special survey. However, charters do become more selective in less robust markets and many of them will not take vessels which are in excess of 20 years old for long-term charters. Therefore, we believe that scrapping will become an increasing factor in the future.

This concludes our presentation. We'd now be happy to take your questions.

(OPERATOR INSTRUCTIONS) Jon Chappell, JPMorgan.

Gerry, I think you have what's probably a nice decision to make in the second half of the year and the first half '08. You have 10 contracts rolling over by April of '08 into what today is a record rate environment and what seasonally could be an even stronger environment. How do you look at taking advantage of potentially record spot voyages or shorter term four to six month voyages versus your previous strategy of maybe one to three year contracts on those ships as they roll off?

Well, I think our strategy will remain as it is at the moment and we'll continue with the longer period voyages.

Do you think for the midsize, the Panamax's and the Handymax's you'd look at maybe shorter one year contracts since you have three years on the Handysize's and could potentially gets some longer terms on the Capes?

Well, we've done one year voyages before on these vessels and if the rates are right, we'll certainly look at it. But the strategy at the moment is to look to the longer periods.

Just another question on Jinhui. I know you've gone over in detail on previous calls on this one what your strategy is with that. But I'm just curious, what's the inside ownership on Jinhui, whether it be a family or management? And is it even possible to gain a majority stake in Jinhui if you so chose?

Hi, Jon, it's John Wobensmith. The controlling family owns approximately 54% of the stock of Jinhui. So based on that, to directly answer your question, no, we could not get a controlling stake. But we still think it is a compelling investment we obviously added over the last week or so to our stake. And so we're up to 17.3% today.

Okay. And a final one on the market, I guess for Gerry as well. This Japanese nuclear power off-line after the earthquake. Are you seeing anything yet? And then also what do you expect to see going forward as far as coal demand to make up for the lost nuclear power in Japan?

Well, you know, it's the age-old question. Whenever there's a [hiccough] at a nuclear plant and people start to look for alternative sources of energy and certainly coal is one of them. And we are beginning to see that. I don't have the exact figures of what the changes are but the changes are certainly there.

Where do you think the excess coal will come from? Does Australia have the capacity to meet that? Or would they have to go to South Africa and the Western Hemisphere as well?

Yes, I would say that. Certainly US and Canada would be big players in that as well. As I said, it bodes well for the drybulk industry because all of these are long haul routes. And it doesn't matter where it comes from; it's going to be a long haul route.

Doug Mavrinac, Jefferies & Co.

Great, thank you, good morning. Just had a few quick questions. First, a lot of attention is always paid to the iron ore and coal trades because of their growth over the last several years. But if you look at the grain trade, I mean we're right in front of the North American harvest season. Can you discuss the impact that the North American grain trade typically has on the drybulk shipping supply demand balance, particularly in the third and fourth quarters?

It normally has a very uplifting effect on the drybulk markets, certainly in those quarters (inaudible) we're coming into the shipping periods, the harvest period, the -- we expect to see the demand for the grain is going to increase.

Okay. Now kind of staying on that topic. You know a lot has been made about that there may be less grains to transport, but do you think that that is -- or will have as big of an impact on the supply and demand balance? Or do you think that just having a significant amount -- I mean, we know that exports typically increase nearly 50% between August and September. Is it just a sure increase it's going to have that positive effect more so than a year on year increase?

Remember, there's a severe drought that's taken place in Australia and their grain production levels have dropped down drastically. And what that means is there's less grain to transport out of Australia, but the shortfall is being made up from South America and also from North America.

Got you, got you. Okay, and then just two other quick questions. You know you have four ships operating on time charters that expire in the second half of this year. How would you characterize interest level on the part of charters to get their hands on those ships?

Very strong.

Okay and then finally, we've seen Capesize spot charter, it's increased nicely over the last couple of weeks. What are the current one year and three year time charter rates that you're seeing kind of quoted out there today?

Okay, if you are looking at them more than Capesize, you're looking at rates on the spot market for say, in the low 100's. If you're looking at the period rates for the same vessel, you're looking at rates for three years in the mid '70s. And for five years say in the mid '50s.

Urs Dur, Lazard Capital Markets.

Hi guys, great quarter. Congrats. I guess some particular more questions about the market, maybe you can add a little color. Commodity prices are coming off a little bit. People are just selling what they can sell in this current market. I tend to think it has a little bit of an impact if not -- or very little or no impact on what it has to do with the ships. But commodity prices going through fluctuations like this in the gray market in particular. How does that impact shipping on a day-to-day basis or does it not?

I would say at this point that it doesn't. Long-term it may, I don't know but it doesn't affect us at the moment.

Okay, how about -- the next thing. China is now a net importer of coal. Are you noticing more and more movements in China or is it still a relatively nascent movement?

It's a pretty fluid movement [to pull] into China. There are more and more vessels taking coal in there overall. Yes, you will see a gradual increase in the movement of coal into China.

How about Chinese coastal demand? Have you seen any further numbers on that? I know for instance Mitsui is throwing out a number of a CAGR of about 7% between now and 2011. Would you agree with that number? Are you seeing capacity being sucked up into the Cabotage trade there?

I would never disagree with Mitsui. (inaudible) out there so I would not disagree with that figure. But to be honest with you, we don't have any figures on the desk at the present time. And if you need that figure we can research it and get it to you.

No, I'm just wondering whether you had a comment there and those are all micro things. But thank you very much and great quarter.

Natasha Boyden, Cantor Fitzgerald.

Thank you, operator. Good morning, gentlemen. I was wondering if Gerry, perhaps you can talk a little bit more about how growth in the Middle East and other Asian regions are impacting the drybulk market as well? Everybody always seems to focus on India and China. Just wanted to see what the impact was there?

Well, we're seeing a lot more finished steel products going into the Middle East and that certainly has a big impact on it, especially in the smaller size vessels. And that steel is coming from China mainly so yes, it's got a big impact. (multiple speakers) Yes, aggregates and cement also going into the Middle East, yes.

Okay, great. I guess there's all awful lot of building going on there. Would I be right in that?

There is, Natasha, yes.

Okay, great. And then just on the Capesizes that you announced. Gerry, would you look to tie those up under five-year contracts or would you prefer the three years?

Natasha, that depends very much on the rates that we're offered at the time when we're ready to fix. I mean, these -- the vessels that we have, four of them, as we've said earlier, are already fixed -- the two in the water and the (inaudible) deliveries from the shipyard. The fourth vessel coming out, there's a tremendous amount of interest in it. And we're just watching the market.

Okay, so it's purely just based on the best rate that you can get?

Yes.

Would that be fair?

Yes -- as long as it's an accretive rate. Yes.

Okay, and then just because there are significant -- the shipyards are incredibly busy. Is there any potential that there may be delays in the deliveries of these [new-build] Capes to you?

No, in fact I think we're seeing the opposite at the moment. There's no news on our desk to say that there was going to be delays. We're still working through the dates that we're being given.

Great. And then, John, I was wondering if you can just give us a quick update on the G&A run rate for the rest of the year on a daily basis?

Yes, I mean, as I said we're going to put out breakeven numbers in just a couple of weeks. The other thing we're going to put out is revenue numbers on the accounting side for the nine Capesize ships so that you can model those out fairly easy. But going back to your question on G&A, I think looking at what we did this quarter is probably the right number to be using.

(OPERATOR INSTRUCTIONS) Scott Burke, Bear Stearns.

Hi guys, good morning. Hey, just a couple of follow-up questions here. First of all, looking at your Jinhui stake right now. Would you have the capacity -- if you were to get a controlling stake, would you have the capacity to actually be able to come up with the funds to do a complete buy-out of Jinhui?

Yes, sure. We're confident that we could.

Okay, so that would be a possibility but so the big roadblock would be a [54 and 54%] holding?

Yes, it would be negotiation with the major shareholder.

Okay. And then kind of related to that, are you seeing any push back? With kind of the liquidity concerns in the broader market, have you received any push back from DnB NOR or maybe some of the other creditors that you would perhaps approach to fund maybe the Metrostar transaction? Have you got any push back in terms of a little bit more difficult to get more debt funding?

No.

No. It's actually quite the opposite. If you see the facility we've put in place, it's actually -- it's a better structured facility for us than the one we had before.

Okay, so money is still flowing for the shipping space at least.

Yes.

Okay, and then kind of one last question. Going back to looking at the Metrostar transaction, the nine Capes you picked up. What kind of competition did you have for that or was that kind of a privately negotiated deal? What kind of competition did you face?

There was no competition. It was a private deal between Peter Georgiopoulos and myself.

All right. Nice way to set it up. Okay, thanks guys.

There are no further questions at this time.

Great.

That does conclude today's teleconference. Thank you for your participation. Have a lovely day. You may now disconnect.

Thank you.

Thank you.