Global Ship Lease Inc (GSL) 2009 Q3 法說會逐字稿

Welcome to the Global Ship Lease Third Quarter 2009 Conference Call. This call is being recorded. Joining us on the call today are Ian Webber, Chief Executive Officer, and Susan Cook, Chief Financial Officer. (Operator Instructions.) I will now turn the call over to Ian Webber. Please go ahead, sir.

Thank you. Good morning, everybody, and thank you for joining us on our Q3 Earnings Call. I hope that you've had a chance to look at the earnings release, which we issued earlier today, and been able to access the accompanying slides via our website.

Slides one and two remind you that today's call may include forward-looking statements that are based on current expectations and assumptions and are by their very nature inherently uncertain and outside the Company's control. Actual results may differ materially from these forward-looking statements due to many factors, including those described in the Risk Factors section of the presentation and in our annual report on Form 20-F filed on June 25 of this year, which you can access via our website or via the SEC's.

All of our statements today are qualified by those and other disclosures in our reports filed with the SEC. We are not under any duty and we don't undertake any duty to update those forward-looking statements. For reconciliations of the non-GAAP financial measures to which we will refer during the call to the most directly comparable measures calculated and presented in accordance with U.S. GAAP, you should refer to the press release that we issued this morning, which is also available on our website.

With that said, I'd like to start by reviewing third quarter 2009 highlights. I'll then review our fleet and charter portfolio, offer some comments on the industry, and then turn the call over to Susan Cook to comment in more detail on the third quarter financials. After that, we'll take questions.

Slide three shows third quarter highlights. During a challenging time for the global economy and in particular for the container shipping industry, Global Ship Lease's modern and well maintained fleets remain secured on long-term charter contracts and continue to achieve a high utilization rate with only four unplanned off-hire days in the quarter out of just over 1,500 days in total of ownership.

Our contracted revenue and capped operating cost arrangements enabled the company to once again record strong and consistent revenue and cash flow. Specifically, in the third quarter we recorded revenue of just under $38 million, which benefited from the addition of four vessels to our fleet in December 2008 and one towards the end of August 2009. We generated distributable cash flow of $15.4 million, a slight increase over the previous quarter. EBITDA for the quarter, which is operating income with depreciation added back, including our 17th ship for only five weeks of the quarter, was $25.6 million, so annualized on this basis, just over 100 million. Based on this and with an enterprise value today of around $700 million, we're valued at seven times EBITDA.

Normalized net earnings were $6.2 million, or $0.12 per A and B common share. And this excludes an 8 million, non-cash, interest rate derivative, mark to market charge, and also an accelerated write-off of $2 million of deferred financing costs, following the reduction in our borrowing capacity after the amendment to the credit facility. Including these non-cash charges, we reported a U.S. GAAP net loss of $3.9 million, or $0.07 per share, for the third quarter.

To reiterate a point we made on our last quarter's call, we continue to focus on prudently controlling operating costs without putting the vessels at risk and to maintain their operating efficiency. This third quarter represents the fifth consecutive quarter that we maintained vessel operating expenses well under the cap amounts set in our ship--set out in our ship management agreements.

Finally, during the quarter, and as we anticipated, we amended our credit facility to enable us to borrow sufficient funds for the accretive purchase of our latest vessel, the 6,600 TEU CMA CGM Berlioz. With the amended facility, we've also insulated the Company from asset price volatility through April 2011, which is the next scheduled test of loan-to-value. We are now using all of our free cash flow to aggressively pay down debt. Undrawn commitments under the facility have been canceled and we can resume the payment of dividends once loan-to-value reverse to 75% or less.

Susan will discuss the terms of the amended credit facility in more detail. But in the circumstances, we are pleased with the amended facility particularly in such a tight credit environment, and particularly to achieve funding for the purchase of our 17th ship. We appreciate the support that we've received from our lenders during difficult times for the banking sector and our industry.

Moving on to slide four, as I mentioned a moment ago, in August, following the amendment of the facility--credit facility, we purchased the Berlioz, a 6,600 TEU container ship built in 2001, further strengthening our relationship with CMA CGM. With the addition of the Berlioz, which has commenced a 12-year time charter, we now have 17 ships on the water, all committed to time charters, with an average remaining duration of 9.3 years. The average age of the fleet is 5.6 years out of a total economic life of about 30 years.

Importantly, given what's happening in the industry with an excess of tonnage and spot charter rates at all time lows, our first charter renewals are not until the end of 2012, when only two out of our current 17 charters come to an end. After that, we don't have any renewals until 2016, which is seven years away.

Including the Berlioz, we have taken delivery of five vessels since November 2008. This has obviously had a substantial impact on the size of our fleet and given these vessels are on average larger than the previous fleet, it increases our annual revenue by 58% to approximately 150 million, 155 million a year, giving a total contracted revenue stream over the remaining life of these charters of approximately $1.6 billion.

With regards to our customer and 46% shareholder, CMA CGM, I'm sure you've seen that the company has recently established a committee of French, European, and international banks, including major financial institutions from Asia and from the Republic of Korea. The purpose of this committee is to investigate means to address CMA CGM's short and medium term financing requirements with the intention of strengthening its capital structure, so that CMA may continue to operate and develop during this turbulent time for the well container industry. The French state is, we understand from CMA CGM's press release, involved in these discussions. Although we are not directly involved ourselves, as you would expect, and we cannot speculate on the outcome of this initiative, naturally, we will continue to monitor the situation closely. With that said, I'd like to note that we are current on all of our charter payments.

Finally, before handing over to Susan, I'd like to say a few words on the industry overall. This is more or less a repeat of what I said the last quarter, although there are some signs of improvement. Demand for 2009 is down. It's the first year in the history of the industry that volume has contracted. And demand may be down by as much as 10%. In the meantime, the global fleet has continued to expand as orders placed two or three or even four years ago in anticipation of a continuation of the long term compound annual growth rate of 10% are delivered.

Estimates are that about 11% of container ship capacity is currently idle, exerting downward pressure on asset values and pushing spot charter rates where owners can find [fixings] to levels at around operating cost. Owners exposed to the spot market, and I should reemphasize that GSL's long term charter [level] largely insulates us from the spot market, owners in that market face very challenging times.

On the carrier side of the industry, the operators, most if not all will still be burning cash. Depressed asset values and customer funding needs place increased stress on lenders who in many cases want to reduce rather than increase exposure to the sector. Therefore financing, particularly for the unfunded part of the order book, is scarce.

However, there are some positive signs. Container volumes are reportedly moving upward. Indeed, some carriers, such as NOL, have recently indicated that liftings in the last month or two have returned to or are even exceeding the volumes in the same period of 2008, which is good news indeed. It also appears that freight rate increases that have been applied over the last few months are holding, although overall freight rate levels remain below those seen in the early parts of last year.

And although it's impossible to predict the expense at which this upward momentum will be sustained in the near term, it's certainly a good sign and there seems little reason to doubt the industry's positive fundamentals over the long term.

On the supply side, the delivery of new tonnage in 2009 looks to be down significantly at around 7.5% projected growth, compared to the start of the year's forecast of over 13%. This is, again, good news. The reduction in demand--in supply growth is from increased scrapping, deferral of new buildings, and some cancellation of orders and conversion of container ships into other sorts of tonnage. Clearly, the reduction isn't enough to drive an immediate rebalancing of supply and demand, which will take further contraction of the order book and an improvement in volumes, but it is indicative of the corrective measures that the industry is taking. Much more needs to be achieved, and that's going to require the cooperation of owners, shipyards, and financiers.

For liner companies, the operators plan to continue to be very challenging. Some operators, and this isn't exclusive, but some operators such as CFAB, Hapag-Lloyd, and Zim, have secured or are on their way to securing financial support or restructuring. And at this juncture I'd just like to emphasize the fact that we have not agreed to any changes to the terms of our charters with Zim. Other lines, like CMA CGM, are in active discussions with their banks. And some folk have been able to raise new capital, including by issuing high yield bonds, although much of that is outside the container sector.

I'd like to now hand over to Susan who will review the financial results for the quarter.

Thanks, Ian. I would first like to mention that the comparative financial information included in our formal unaudited financial statement for the three months ended September 30, 2008, is prepared under predecessor accounting rules and includes the results of operations of two of the vessels when they were owned by CMA CGM and operated in their business of earning revenue from carrying cargo up to the dates that we purchased them in January 2008. The predecessor and Global Ship Lease business models are not comparable. Further, there were significant changes to the company's legal and capital structure, arising from the merger with Marathon, which completed on August 14, 2008, and resulted in the company being listed on the New York Stock Exchange. Accordingly, due to these significant changes, only selected comparative information will be presented on today's call and be included in the earnings release. As time goes on, we will have more meaningful and directly comparable prior period data to discuss.

With that said, and turning to slide six, we present our financial results, which relate to our time charter business only. For the quarter ended September 30, 2009, we recorded revenue of $37.6 million, up 57% from revenue of 23.9 million in the comparable period of 2008. In the first nine months of 2009, revenue was $108.8 million, up 58% from 68.7 million for the prior year period. These increases reflect the purchase of four additional ships in December 2008 and one in August 2009. These five vessels earn an average charter rate of $31,450 per day, significantly higher than the $22,685 average rate of the original fleet of 12 vessels.

During third quarter 2009, there were 1,508 ownership days with only four unplanned off-hire days, which with 16 days for a planned dry docking, days utilization of 98.7%. Compared to the prior year period, first quarter ownership days have risen 37% from the 1,104 days in 2008.

Looking at the nine-month period for this year, there were 4,404 ownership days with 42 unplanned off-hire days and 16 scheduled dry dock days. Fleet utilization over this period was 98.7%, approximately the same as the comparative period at 98.6%, based on 3,263 ownership days.

In the third quarter, vessel operating cost, which includes crew cost, lubricating oil, spares, and insurance, were $10.3 million, or on average, $6,820 per ownership day, which is a 5% decrease from $7,217 in the previous quarter. This reduction is primarily attributable to an insurance related credit during the third quarter, as well as extra costs incurred in the second quarter relating to crane jib improvement and replacement of radars and turbo charger grids.

When compared to the third quarter of 2008, costs were down 5% from the daily average cost of $7,145. For the nine-month period ended September 30 this year, vessel operating expenses were $31.5 million with an average cost of $7,156 per ownership day. This compares to 21.9 million vessel operating expenses associated with the time charter business in the comparative period of 2008, or per ownership day, a figure of $6,703. Vessel operating costs during the quarter and nine-month period were affected by high crude costs compared to 2008 and the impact of the four larger vessels delivered in December 2008, which are more expensive to operate. Vessel operating expenses continue to be at less than capped amounts included in GSL's ship management agreement.

Depreciation for the three-month period was $9.5 million, compared to 5.2 million in the same period in 2008. For the nine-month period, depreciation was 27.2 million against 14.7 million in 2008. Both the current years three and nine-month periods include the effect of the four additional vessels purchased in December 2008 and the five weeks of the Berlioz.

We incurred general and administrative costs in the three months ended September 30, 2009 of $2 million, compared to 1.5 million for the time charter business in the comparable period in 2008. For the nine months, G&A costs were $6.6 million, compared to 3.3 million in 2008. G&A through 2009 is significantly higher than 2008, when the company was a wholly owned subsidiary of CMA CGM until it was listed in the middle of August. A significant portion of the increase is a non-cash charge of 0.6 million for stock-based compensation for the third quarter 2009, and $2.2 million for the nine-month period, based on a stock price of around $7.50 at the date of the [grant].

Interest expense, excluding the effect of interest rate derivatives, which do not qualify for hedge accounting, for the three months ended September 30 were $7.9 million. This includes a non-recurring write off of $2 million of brought-forward unamortized deferred financing costs arising as a result of reduced borrowing capacity following the amendment to the credit facility agreed in August of 2009. The company's borrowings under the credit facility averaged approximately $564.4 million over the quarter and there were $48 million worth of preferred shares throughout the quarter.

Interest expense in the comparative quarter in 2008 was 4.2 million, based on average borrowings of $453.4 million. In the nine-month period, net interest expense was $18.1 million, including write off deferred financing costs, and which was based on average borrowings, including preferred shares of $597.6 million. This is compared to $18.8 million of net interest expense for the comparative period in 2008, based on average borrowings of 536 million through the period, and which was adversely affected by substantially higher prevailing interest rates in the first quarter.

We have hedged all of our interest rate exposure by entering into derivatives that swapped our floating rate debt to fixed rate to provide us with long term stability and predictability to our cash flows. These hedges do not qualify for hedge accounting under U.S. GAAP. The outstanding hedges are mark to market each period end, with any change in the fair value being booked to the income and expenditure account. The changes in the fair value arising from movements in the forward curve for interest rates caused a $12 million charge in the three months ended September 30, 2009. Of this amount, $3.9 million was realized for settlement of swaps in the period, leaving an $8.1 million loss in the unrealized revaluation of the balance sheet position. This compares to a 6.7 million loss in the third quarter of 2008, of which 0.3 million was realized and $6.4 million was unrealized.

For the nine months ended September 30, 2009, the reported gain was $4.1 million, which consisted of an 8.7 million realized charge and $12.8 million unrealized gain. In the comparative period in 2008, there was a reported loss of $1.5 million of which 0.4 million was realized and 1.1 million was unrealized. At September 30, 2009, the total mark to market unrealized loss recognized as a liability was $34.2 million. Our interest rate swap strategy reduces risk and the mark to market adjustments have no impact on operating performance or cash generation.

Including non-cash charges and deferred financing costs, we reported a net loss of $3.9 million for the third quarter, or $0.07 per Class A and B common share. For the comparable period in 2008, we reported a net loss of $1.2 million. For the nine-month period, including non-cash charges, we have reported net income of $13 million, or $0.56 per Class A and B common share. We reported a net loss of $9.2 million for the nine-month period in 2008.

Normalized net earnings, which adjust for mark to market, were $6.2 million, or $0.12 per Class A and B common share for the third quarter of 2009, which excludes the 8.1 million non-cash interest rate derivative mark to market loss and the $2 million write off of deferred financing costs following the reduction in the company's borrowing capacity.

For the nine-month period, normalized net earnings were $19.4 million, or $0.36 per Class A and B common share, excluding the 12.8 million non-cash interest rate derivative mark to market gain, and 2.2 million deferred financing costs written off. We believe that normalized net earnings is a useful measure with which to assess the company's financial performance as it adjusts for the effects of non-cash and other items which do not affect the company's ability to make distributions on common shares.

We generated $15.4 million in cash in the third quarter. For the nine months ended September 30, 45.5 million of cash was generated. However, under the terms of the amendment to our credit facility, no common dividends can be declared or paid until the later of November 30, 2010 or when the loan to value falls to 75% or below. Once the company is able to resume its ability to pay dividends to its shareholders, the Board of Directors will review its policy.

Moving to slide seven and looking at the balance sheet, the key items as of September 30 include cash [funding] at $29.5 million, vessel deposits of 16.1 million on the ships to be purchased by the end of 2010. We have total assets of 1 billion, of which 970.6 million is vessels in operation. The current portion of long term debt is $60.6 million and the shareholders' equity is 314.8 million. The balance sheet position, as I mentioned a moment ago on our interest rate swap, is a liability of $34.2 million.

The next slide, number eight, reviews our credit facility in more detail. Under the terms of the agreement, the loan to value maintenance covenant has been waived up to and including November 30, 2010 with the next test scheduled for April 30, 2011. In terms of pricing, the amounts borrowed under the amended credit facility will bear interest at LIBOR plus a fixed interest margin of 3.5% until November 30, 2010, from which time the margin will be between 2.5% and 3.5% depending on the loan to value ratio.

In connection with the amended credit facility, all undrawn commitments totaling approximately $200 million were canceled, and as I already mentioned, our dividend has been suspended. We are essentially using our cash flow to aggressively prepay our credit facility borrowings. However, we are able to resume common dividends when the loan to value is at or below 75%, at which point the prepayments of borrowings become fixed at $10 million a quarter.

Additionally, in conjunction with the amendment to the facility, CMA CGM has agreed to defer the commencement of redemption of the 48 million preferred shares that it holds until August of 2016, which is the final maturity of the credit facility. The company has also agreed to retain its current holding of Global Ship Lease common shares until at least November 30, 2010.

I would now like to hand over to the operator, who will explain the Q&A process.

Thank you. (Operator Instructions.) Our first question will come from Michael Demaray with Elevated Capital. Please go ahead.

Hello, Ian. Hello, Susan.

Hi, Michael.

I just wanted to first of all say I think you guys did a great job in getting the length of the credit amendment to be so long. I mean, obviously, that will help us out when your peers are having to renegotiate in January and we're not faced with that uncertainty. So good job on that.

Thank you.

My first question is a point of clarification on the Zim ships. Specifically, when I read through the whole agreement, Section 14, the Seller's Default section, it appears that the contract is cancelable if the seller undergoes any meaningful financial restructuring or halts their debt payments, and if that's the case, then the deposit is refundable. Is that a correct reading of that?

Well, I'm not a lawyer, so I mean, I can't give you definitive advice. But just if that's what it says on the page, that's what the intention is.

Okay. All right, great. And then, I wanted to kind of talk a little bit about refinancing the debt. Obviously, this is a very tough environment and it's probably impossible to do now. But is your understanding of the credit agreement one where given--setting aside the November 30, 2010 deadline for a second, could GSL raise a portion of financing to replace the bank debt? Not the entire portion, but say half of it? And so long as it was subordinated to the bank debt, would that satisfy the LCV covenant, assuming that the ship values were greater than 75% of the bank debt portion?

Well, I think irrespective of what the credit agreement actually says--I don't think it would allow us to do that anyway. Irrespective of what the credit agreement says, I think our bank group would be absolutely delighted if we were able to raise $200 million from elsewhere and use it to pay down our borrowings.

Okay, great. And--.

--But you're right. I don't want people to get too excited here. And our ability to do that right now given the uncertainty, particularly around CMA CGM, is severely limited.

Okay. And you mentioned that there are some bond issues going off that are not--mostly not containers. What are you seeing in terms of spreads on those bond issues currently?

With the margin for those (inaudible) being issued (inaudible) yields, so about 10%, 10 to 12% or so.

Okay. All right. And then, I guess my last question would be there seems to be--the ship market seems to be bifurcating into the haves, those with charter contracts, and the have-nots, those that don't have charter contracts. And obviously, there's been some talk about the Hamburg model of ship valuation gaining credence. Obviously, that would be--or the credit agreement specifically prohibits a charter valuation. Do you think that adoption--widespread adoption of the Hamburg model would benefit GSL on a refinancing though?

That's a very good question. And it's one that we sort of slightly struggle with, being somewhat cynical in our--the Hamburg valuation, which for those who are not familiar with it, is essentially a charter attached valuation, so it takes account of current and potential future cash flows associated with the vessel. It seems to have been developed to allow banks to assess their loan portfolios. And it's obviously more generous to the banks than the valuations they are permitting their customers to use, which are charter-free, which is basically the (inaudible) of the ship with no tax income. Whether we will ever get to a position where lenders will allow borrowers such as us to use the Hamburg valuations to assess loan to value I don't know. But it seems iniquitous if on the one hand they use a higher valuation to look after their own portfolio and on the other having forced borrowers to use a lower valuation to assess their loan to value or leverage.

Okay, that's it for me. Thank you.

Our next question is from [Greg Gurst] from [Gurst Capital]. Please go ahead.

Hi, Ian. Hi, Susan. How are you?

Good, thanks. How are you doing?

Good, good. Just--I've got a few question areas. First is a follow up on Michael's questions on refinancing. The second is a couple of questions on Zim. And then, third are just some simple financial modeling questions. So on the refinancing, let's assume CMG restructures, they continue to perform on the contract terms that have been agreed upon. Assuming that happens, and hopefully that will happen soon, will you guys start right away looking at financing alternatives?

What makes you think that we're not already looking at financing alternatives? As [partner], I've got a responsibility to look after the balance sheet and look at all of the options. And we keep an eye on the market. We're in contact with investment bankers, if they're not in contact with us. We see what other companies, like Navius and General Maritime have done, particularly currently, as I said, in the high yield environment. And it's our intention to continue that process and when the opportunity arises to refinance or raise incremental capital we'll do so.

Well, I gave you a softball to start. So--if we go into more specifics of the refinancing then, what should we be looking for, using an example, for instance, Zim and others. When Zim was entering their restructuring they hired Goldman to--as their advisors and press releases went out and what not. What should we be looking for? Assuming let's say CMA comes to an agreement with their creditors at the end of this month, what can we be looking for subsequent to that from you guys as far as to let us know the steps involved in the refinancing?

Well, I think the companies that you've quoted have appointed advisors when they've been up against it, their backs against the wall and--.

--Sure, sure. But there's other--I mean, there's many other examples of companies that are out looking for major financing who hire outside advisors. Not a question of whether you're going to hire outside advisors, but is there--can you take us through the step by step what you guys will need to do in order to get going on that?

Well, no, not really, because every situation is different. And you all understand the capital rating process just as well as I do. It would be very unusual for a company in the ordinary course of its business to announce ahead of time that it had appointed XYZ investment bank to assist in capital raising. There are so many different scenarios, Greg, out there. I hope you understand. I can't be specific. If the circumstances are appropriate, then we'll make disclosure. If it's ordinary course, routine capital raising, then we won't.

Okay. All right. On the Zim restructuring plan, that looks like it's been approved. Can you comment on the terms of that restructuring plan as it applies to ship owners?

I can only talk about our position. I don't know the position of other ship owners. And as I said in my prepared remarks, we've not agreed to any changes to our charter contracts and we have no intention of agreeing to any changes to those charter contracts.

So just to--I mean, reading the press releases, I'm trying to get color from you. I interpret the press release on the Zim restructuring as that Zim has not requested any non-Ofer Group to accept charter reductions.

I really can't speculate on exactly what some other company's press release means. Now, we've said no, we're not going to agree to any charter rate changes. We've not been party to discussions, as you would expect, between Zim or any other stakeholder or supplier or bank or whatever. So I can only talk about the relationship between Zim and Global Ship Lease.

Okay. On the financial side, can you--with the new financing rate, what is the quarterly cash run rate on interest payments?

It's about $7 million.

7 million, okay. And with the current model, with the Berlioz, all the ships you've got, what's the--at the end of 2009, what's the anticipated debt balance at that point?

Well, we don't issue sort of forecasts like that, but we've said that we generate about $15 million of cash a quarter. That's certainly what we generated in this last quarter. So you can extrapolate that. We've also disclosed, because of the changing of the arrangements on the credit facility, that we have the cash free to prepay debt. As you'll see, and Susan referred to it in her remarks, you'll see that our best estimate at the time is that we'll be paying down just over $60 million of debt in the 12 months from September 30. Now, I have to caution people that that is our best estimate and the number might change, but given our stable business model, et cetera, we are hopeful that that's a fairly good estimate of how much cash we'll--free cash we'll generate to pay down debt.

Okay. I'll get back in queue and let other people on. Thanks.

Thank you.

Our next question is from Barry Konig from Cumberland Associates. Please go ahead.

Hi. Thank you for taking my question. I just wanted to confirm one thing I heard, which was that the equity that CMA holds they can sell after November 30, 2010.

No. What we said is that they've agreed not to sell it until after 2010, so that I think the reciprocal is, yes, subject to registration rights and all of the rest that they are free to sell.

After November 30, 2010?

Correct.

Thank you very much. Appreciate that information.

You're welcome.

(Operator Instructions.) Our next question is from Garrett King from Truffle Hound Cap. Please go ahead.

Hi. Since the IPO, have there been any restrictions on management on open market transactions of the company's shares?

Nothing other than the ordinary ones of our inability to buy or sell shares in closed periods.

This is surrounding earnings announcements?

I'm sorry?

The closed period surrounding earnings announcements is what you're referring to?

Or when the Board deems that there's material inside information in the closed period on everybody who is an insider.

Okay.

Or for example, when we were renegotiating the credit facility.

Okay. Also, can you give us an idea, you mentioned that the average charter rate for the new ships is around $31,000 per day roughly. Can you give us some idea of what market rate would be for that ship?

Well, that--I think that average rate was of the five ships that we bought most recently and there is no real spot rate for vessels of that size. But the spot charter market at the moment is very thin. It's most active in vessels under 2,000 TEU. And for those vessels they are by and large being chartered--where owners are able to obtain a fixing at all, they're being chartered out at roughly operating cost. So you're talking about $4,000 to $7,000 a day maybe.

Okay, thank you.

But it's very, very different to the long term time charter agreements that we have in place, which are much, much more the nature of an off balance sheet financing transaction with an operating cost overlay. It's not market driven. It's a calculated number based on the return that the owner expects over the period of time given the upfront investment in the vessel.

Right. Okay, thank you.

Our next question is from [Nathan Lafune] from Harbor Holdings. Please go ahead.

Good morning, Ian. Good morning, Susan.

Hi.

Thank you for taking my call. A couple of quick questions. Just out of curiosity, on your larger ships that you were just talking about, are they shipping--how full are they shipping? In other words, are they carrying a normal, higher, or lower amount of containers than they would've carried a year ago, the year before that? What's the TEU action on these ships?

Well, that's really down--that's the information for the operator. It's obviously of interest to us, but it's of no direct relevance to us as owner as to how full those ships are. I think it would be fair to say that it will vary some. Where trades continue to be reasonably robust, for example, the north-south trades, Europe to Africa, utilization will probably--and I don't have detailed knowledge yet--but will probably be much the same as previous years. And trades which are suffering right now, like the Trans-Atlantic trade and the Trans-Pacific trade, unless operators are significantly constraining capacity by taking ships out of systems and services, then utilization will be down. And therefore, it's far less easy to obtain price increases. So I'm sorry that I can't answer your question, other than in those general terms.

Well, I appreciate that. Back--I just want to revisit the loan to value question in a general way. You are prohibited from paying any distribution prior to the later of--is it that September--or November date, 2010, or a revaluation of the loan to value covenant? Is that correct?

That's broadly correct. We are only able to resume our common dividends at the earlier of the 30th of November next year or when loan to value becomes 75% or less.

In the absence of ship valuations, isn't that kind of a moot point on what the actual loan to value is?

It could be. But as we've said before on previous calls, we are able to get ship valuations, it's just that we don't believe them. And they aren't helpful. And if we genuinely--if we were not able to get loans--if we were not able to get valuations and that part of the industry was completely frozen, we would have had no need to amend the credit facility. But we can get valuations. But as a result of the various waivers and amendments to our credit facility, we have no obligation so to do and we have not, therefore, in order to save money. And a lot can happen over the next 12 months or so. What drives brokers' ability to give valuations is activity in the market, certain purchase activity. And there are signs that that is increasing. But again, it tends to be--right now, with the smaller ship sizes--and there may be some new ordering activity. I think it's unlikely. But there may be some new ordering activity, which will help to set benchmarks.

Okay, thanks. And finally, GSL does not show up, at least accurately, in a number of databases for those of us who pick around at our computers looking for who's buying and selling and so on and so forth, whether it's as simple as Yahoo! or the MFFAIS Group. Is there any way that you all as a company or as management have an interest in seeing that information about GSL is more readily available to investors?

Yes. Nathan, if you want to drop an email to us with the areas--the websites or wherever where you've got particular concerns, then we'll look into it.

Okay, that's it. Thank you.

Thank you very much.

At this time there are no other questions in the queue. Mr. Webber, I'll turn the call back over to you.

Thank you. Thank you, everybody, for listening. I apologize, again, for the interruption to the call earlier on, and thank you for your patience. We look forward to talking to you in the New Year on our quarter four earnings call. Thank you.

This concludes today's conference. Thank you for your participation.