Navios Maritime Holdings Inc (NM) 2010 Q4 法說會逐字稿

Thank you for joining us for this morning's Navios Maritime Holdings fourth-quarter and full-year 2010 earnings call. With us today from the Company are Chairman and CEO Ms. Angeliki Frangou, President Mr. Ted Petrone, and Chief Financial Officer Mr. George Achniotis.

As a reminder, this conference call is also being webcast. To access the webcast, please go to the Investors section of the Navios Holdings website, www.Navios.com.

Before I review the structure of this morning's call, I would like to read the Safe Harbor statement. This conference could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Holdings. Forward-looking statements are statements that are not historical fact.

Such forward-looking statements are based upon the current beliefs and expectations of Navios Holdings' management and are subject to risks and uncertainties, which could cause actual results to differ from forward-looking statements. Such risks are more fully discussed in Navios Holdings' filings with the Securities and Exchange Commission. The information set forth in this conference call should be understood in light of such risks.

Navios Holdings does not assume any obligation to update the information contained in the conference call. Thank you.

I would like to now outline the agenda for today's call. First, Ms. Frangou will offer opening remarks. Next, Mr. Petrone will provide an operational update and industry overview. Following Mr. Petrone's remarks, Mr. Achniotis will review Navios Holdings financial results. Finally, Ms. Frangou will offer concluding remarks before then opening the call to take your questions.

I would now like to turn the call over to Navios Holdings' Chairman and CEO, Ms. Angeliki Frangou.

Thank you, Laura, and good morning to all of you joining us on today's call. We are pleased to report the results for 2010. We increased EBITDA by almost 64% to $339 million and net income by 127% to $154 million. At the same time we have reduced our net debt to capitalization by almost 8% to 49% on a pro forma basis, excluding Navios Acquisition.

For context, we have reduced our net debt ratio at the time of significant growth. Based on the strong results we have declared a $0.06 dividend for the fourth quarter of 2010 payable on April 12, 2011 to shareholders of record on March 22. I am pleased that Navios remains one of the few drybulk companies paying a dividend.

The shipping industry has been suffering as of late. Today our industry is being weighted down by the absence of available capital. And shipping companies who have assumed capital will always be available today have strained balances.

Fortunately, [the] industry is going through this transition while there is a healthy demand for mineral and grain commodities, including oil globally. You can see current demand in the commodity prices and future demand from the urbanization of emerging markets.

In January Korea Line Corporation filed for receivership. This is a reorganization under bankruptcy law in South Korea. Navios has five vessels charted out to Korea Line. While the situation is dynamic, Korea Line has offered to restructure the contract (inaudible) for our vessels. We are in conversation regarding applicable terms. At the same time we have provided a 30-day notice to Korea Line demanding that the charters be reaffirmed or terminated.

As you can imagine, this is a fluid environment, however, we can confirm to date that all these charges are covered by an AA European [plus entity] insurance. We are acting in concert with the insurer to protect our interest, and are reasonably comfortable that we understand and we will definitely manage the extent of our exposure.

Let's now turn to slide 2, which reflects our current structure. Navios Holdings has developed a stable core fleet of 57 vessels, of which 44 are active in the water. The fleet is reasonable insulated from the market volatility, as we have entered into long-term charter with credit-worthy counterparties and obtained the AA plus insurance for these contracts.

The net result is a dependable long-term cash flow. For example, in 2011 Navios contracted about 83% of its fleet days, generating more than $307 million in gross revenue. Navios Holdings value consists of its core operating business and investments in key operating subsidiaries.

As you can see from (inaudible), the value of Navios Holdings' interest in two public subsidiaries is almost $4 per share, that now as a value of Navios Logistics is also growing. We have been developing a unique logistics opportunity in South America. And today Navios Logistics is a key provider of integrated logistics in the (inaudible) region.

Let's now turn to slide three, as we view the key developments for 2010. Given the uncertain state of the capital markets we focus on strengthening our balance sheet. We recently refinanced our secured bonds during 2014, as George will discuss in greater detail. As an example of [business] financing, (inaudible) maturity will be in 2017, six years from today.

Until then we will all have to repay or refinance a total of about $105 million, of which no amounts are due in 2011. We also delevered by repaying $371 million of bank debt.

We also acted opportunistically in buying our securities to reduce the dilution to our shareholders. We purchased about $131 million of mandatory convertible preferred shares for a 62.5% discount. We paid about $49 million for the 31.1 million underlying shares. The effective share price of $3.75 is a 31% discount (inaudible) from the current market price of our shares.

We also purchased convertible notes we had issued for $33.5 million at a 13% discount, benefiting by about $4 million in (inaudible) dilution of over almost 2.5%.

We have also taken important steps towards deconsolidating Navios Acquisition from Navios Holdings (inaudible). We have a (inaudible) to convert about 7.7 million shares of Navios Acquisition common stock into preferred stock. Our economic interest will be (inaudible) of what it is today. But our holding interest will be reduced to 45%. We will be able to convert the preferred shares back to common two years from the date of the preferred interest to the extent the conversion does not result in us owning more than 45% of the vote of Navios Acquisition. We expect this change to be effective before the end of the first quarter of 2011.

On the bottom of the slide three we outlined the favorable restructuring of two charters. Under the restructuring we will be receiving a $13 million lump-sum payment. This represents a $1.5 million [of present value burden] if we compare to the charter payments that otherwise will be received over the term of the original charter.

As you can see on slide four, we had strong liquidity at the end of 2010. We have reduced our net debt to capitalization by almost 8% to 49% on a pro forma basis. We have a healthy cash balance of almost $166 million and liquidity of almost $200 million as of the end of 2010.

On a group basis we had the total Group (inaudible) of almost $320 million. This liquidity is more than sufficient considering that Navios has fully completed (inaudible) problem. We anticipate that we will generate also very significant cash flow during 2011 given Navios' low operating breakeven.

Slide five sets forth Navios' substantial fixed revenue and low operating costs. As you can see, 83% of Navios revenue is fixed for 2011 at about $28,200 per day per vessel. In addition, approximately 58% is fixed for 2012 at about $30,000 per day per vessel.

These compare very favorable with our low operating breakeven of $18,107 per day per vessel. The net result is that we will be enjoying substantial free cash flow generation during 2011.

(inaudible) that our operating breakeven rate includes operating expenses, dry docking, chartering expenses for our chartering fleet, G&A, including credit default insurance, interest expense and capital repayment.

With that, I would like to turn the call over to Mr. Ted Petrone, Navios' President, who will take us through Navios operation an an industry perspective. Ted.

Thank you, Angeliki, and good morning all. Plese turn to slide six. We recently completed our newbuilding program, as we have taken delivery of five Capesize newbuildings during the past five months. The vessels are chartered out, and in 2011 will be the first year that all newbuilding vessels will provide earnings.

During the fourth quarter Navios chartered out six vessels for a total of nine years time charter coverage to creditworthy counterparties, taking advantage of strength in the market for periods covered.

Please turn to slide seven. Our long-term core fleet consists of 57 vessels totaling 6 million dead weight. We have 44 vessels in the water with an average age of 4.6 years, which is considerably younger than the industry average age of approximately 14 years.

The Navios Group controls 95 vessels composed of 73 drybulk vessels of 7.7 million dead weight, and 22 tankers of 2.9 million dead weight. Please turn to slide 8.

Navios average 2011 charter-out rate for its core fleet is $28,224 a day. The average annual charter-out rate increases to 2013. The percentage of Navios' fleet that is chartered-out is 83.3% for 2011 and 58.4% for 2012. [The] contracted revenue of over $740 million through the end of 2013, and maintain credit default insurance on chartered-out contracts from EU-backed AA plus entity.

Please turn to slide 9. Through our in-house technical management and economies of scale we continue to enjoy vessel operating expenses significantly below the industry average in all asset classes. Navios' current daily OpEx is $4,276 a day, about 33% below the industry average.

The chart to the right demonstrates that Navios' established reputation allows us to charter-in vessels and earn favorable spreads from high-quality counterparties for long periods without any capital outlay.

Please turn to slide 10. We currently own 28.7% of Navios Partners, including our 2% GP interest. Navios Maritime Partners operates a fleet of 16 vessels, equaling 1.7 million dead weight, with an average age of 5.8 years.

Please turn to slide 11. Our 28.7% interest in Navios Partners has a market value of about $268 million as of February 21. Navios Partners provides significant cash flow to Navios Holdings. We anticipate based on current run rate receiving about the $24.5 million in distributions during 2011.

Please turn to slide 12. We own 53.7% interest in Navios Maritime Acquisition Corporation. As discussed earlier in this call, we are converting some common shares into preferred shares. After this event, Navios Maritime Holdings will own a 45% voting interest and a 53.7% economic interest in Navios Maritime Acquisition and the financial results will no longer be consolidated.

Navios Maritime Acquisition Corporation's current fleet consists of 22 tanker vessels, totaling 2.9 million dead weight. Navios' fleet is comprised of 7 VLCC crude tankers, 15 product tankers and 2 chemical tankers.

Navios Maritime Acquisition currently has 10 vessels in the water, with an average age of 7.7 years. Navios Maritime Acquisition Corporation holds options on 2 LR1 newbuilding product tankers.

Please turn to slide 13. The Company is summarized on slide 13. Navios Maritime Acquisition committed to the tanker segment given favorable industry dynamics. Navios Maritime Acquisition has long-term contracted revenue well above the Company's low operating breakeven and profit sharing arrangements in most of these agreements. As a result, our downside risk is limited to the base rate, while we can enjoy upside volatility through profit-sharing.

Please turn to slide 14. Navios operates one of the premier logistics providers in the Hidrovia region. Navios Logistics has three divisions composed of port terminals, cabotage and a groundwater fleet. We have been innovators in the region and have expanded our services to include mineral and grain transportation in Argentinean cabotage business.

Please turn to slide 15. Navios Logistics had a strong fourth quarter, increasing revenue by 28% to $44.8 million and EBITDA by 159% to $9.7 million.

Total year revenue increased by 35% to $188 million and EBITDA by 9.8% to $32.5 million, due primarily to record grain shipments through the port, increased barge business, and better realization of the fleet through conversion of COA revenue into time charter revenue.

Navios Logistics has a strong balance sheet. In Q4 cash and cash equivalents accounted to -- amounted to $39.2 million compared to $26.9 million on December 31, 2009. Total assets grew by 11% to $547.5 million by the end of Q4 2010. Net debt to book capitalization is a conservative 20%.

Please turn to slide 16. Drybulk seaborne trade increased substantially in 2010, but by Q4 was not enough to counteract a number of factors, mostly related to China, revenue from the government's monetary tightening, steel industry rationalization and power curtailments to the industry.

2011 started with normal seasonal slowdown, and then Australian flooding, which dramatically reduced the availability of coking coal. Flooding in Australia, which provides around 50% of global seaborne coking coal exports, disrupted the entire drybulk industry. This added to the distress being caused by weather-related disruptions to coal shipments from Colombia and Indonesia, Russian grain export ban, and restrictions on Indian iron ore shipments.

Our short-term outlook is dominated by disruptions to cargo availability and the pace of newbuilding deliveries.

Please turn to slide 17. The drivers for world GDP growth continue to evolve as emerging economies lead world expansion. As you can see on the left, the growth of rich economies remains below precrash levels, while the growth of emerging economies exceeds those levels by more than 10%.

On the right you can see that growth in China and the developing economies contributes a higher percentage of total world growth than the rich economies. The IMF expects that these macro trends will continue for the foreseeable future.

Turning to slide 18, since China joined the WTO in 2001 trade in drybulk commodities expanded by 5.5% per year through 2010. Growth in 2011 is estimated by analysts to range between 5% to 7%. While the primary engine of trade growth continues to be China, India, Brazil and the other emerging economies add strongly to that growth.

Turning to slide 19. Drybulk commodity trade is driven by urbanization and industrialization. On the left you can see that the Chinese population is rapidly moving to cities at an average rate of about 20 million people per year. This is like building 2.5 New York Cities per year, including all the associated products for maintaining urban life, such as cars and appliances.

China is expected to increase its urban population to over 1 billion inhabitants by 2030. And world crude steel production continues to expand to meet these needs, usually at a rate of growth greater than GDP growth, as shown in the upper right-hand chart.

China imported 622 million tons of iron ore in 2010 to keep pace with high steel demand. This is on par with 2009, but reflects high iron ore prices, a tightening monetary policy, government slowdowns and rationalization of the steel industry, and power reductions in the fall of 2010.

World crude steel production was 119 million metric tons in January, 5.3% higher than January 2010. China's crude steel production for January was 52.8 million metric tons, an increase of 0.5% on January 2010.

Turning to slide 20. India has taken initial steps to industrialize and urbanize. As you can see on the left-hand chart, India is expected to increase its urban population by over 200 million people in the next 10 years. That means there will be additional requirements from India for building another 2.5 New York Cities per year and all the associated demand for infrastructure and related products.

This trend has changed drybulk trading patterns worldwide for all vessel sizes. India no longer supplies China with coal, but instead is an importer, forcing China to import greater quantities of coal from outside the Pacific Rim.

Indian coal imports shown on the right-hand chart, have increased dramatically at a 26% compounded annual growth rate since 2006. India now imports more coal per year than the UK, France and Germany combined. Forecasts are for continued growth, and Indian companies are buying coal assets around the world to ensure future supplies. These developments have increased seaborne demand and also increased the ton miles traveled.

Turning to slide 21. As shown in the right-hand table, the recent downturn in the market, along with high scrap prices, have induced recent increased scrapping. Through February 11 about 2.1 million dead weight has been scrapped, about the same amount that was scrapped in 2006 and 2007 in total. Annualized, the February scrapping represents about 18 million dead weight or 3% of the fleet.

At current scrap prices a typical Capesize vessel could earn its owners about $10 million. So we expect an above-market trend in the current rate environment. About 16% of the fleet is older than 25 years of age, and 23% of the fleet is over 20 years old, providing about 125 million dead weight of scrapping potential.

Moving to slide 22. 2010 newbuilding deliveries were 77.9 million dead weight against an expected 125.6 million dead weight, a slippage of 38%.

In addition, the estimated order book for 2011 balloons from about 120 million dead weight to 137 million dead weight, as statisticians defer 2010 non-deliveries into 2011.

On January 31, non-deliveries in 2011 equaled 46% as 10.7 million dead weight out of an expected 19.8 million dead weight delivered. We believe that non-deliveries will play an important role in 2011. Order book declines in 2012 and again in 2013.

Despite high slippage in 2010 deliveries established a record year for newbuildings. 2011 order book seems to be similarly over-marked and non-deliveries may exceed 40%, but the additions to the fleet will again be substantial.

In conclusion, there are a number of short-term factors that are resolving, providing a more positive outlook for the rest of the year. For example, New England's coal industry avoided further serious weather-related damage. India's Supreme Court ruled that iron ore stockpiles in Karnataka's ports could be shipped and delayed Indonesian coal trading permits were issued.

Together with the forthcoming South American grain season, rebounding coal and iron ore supplies are expected to increase cargo availability in the second quarter.

This concludes the industry section. I would now like to turn the call over to George Achniotis for the Q4 financial highlights. George.

Thank you, Ted, and good morning all. Please turn to slide 23 for a review of the fourth-quarter and the year ended December 31, 2010 financial highlights.

I would like to draw your attention to the fact that we are presenting the consolidated results on a pro forma basis to exclude the effect on Navios Acquisition. You'll note that in Q1 2011 we will no longer consolidate Navios Acquisition into Navios Holdings based on what Angeliki and Ted discussed earlier.

EBITDA for the quarter increased by 92% compared to the same period last year from $55.3 million to $106.3 million. After adjusting for the $29.3 million profit from the sale of two vessels, and $3.8 million gain from the buyback of the convertible notes, our adjusted EBITDA for the fourth quarter of 2010 was $73.2 million. This represents a 42.7% increase over the $51.3 million adjusted EBITDA for the same period of 2009.

The increase is mainly attributable to the delivery of the newbuilding vessels to our own fleet. The available days attributable to the owned vessels increased from 1,945 in the fourth quarter of '09 to 2,350 days in the same period of 2010. During the same period the available days attributable to the charter-in fleet, both short and long-term, decreased by approximately 700 days.

Now that we have a higher operating profit margin on the owned vessels versus the charter-in ones, which reflects our lower operating expenses versus the charter-in costs.

Another factor that contributed to the increase in EBITDA in the quarter was the higher time charter rate achieved in Q4 2010 versus '09. The average TC rate for a Q4 2010 was $26,282 per day compared to $24,120 in 2009.

Furthermore, the results from Navios South American Logistics were significantly better than expected, taking into consideration the seasonality in the region.

EBITDA for the fourth quarter of 2010 was $9.7 million compared to $3.8 million in 2009. This was caused by increased demand at the port in Uruguay and the conversion of certain COA contracts into time charter ones. This change minimizes the effect of the water levels and navigation problems in the river.

Net income for the period increased by 361% between the fourth quarter of 2009 and 2010. After adjusting for the items that affected EBITDA described earlier, plus a $2 million adjustment for the write-off of deferred financing costs due to the issuance of the secured bond in November of 2009, adjusted net income increased by 132% from $10.5 million in 2009 to $24.4 million in 2010.

The increase was achieved despite the high interest expense following the issuance of the $400 million secured bond in the fourth quarter of '09, and the higher depreciation charge due to the increase of the owned vessels.

Looking at the full-year results, EBITDA increased by approximately 64%. The results for the full year of 2010 include a gain of $55.4 million from the sale of five vessels, a $17.7 million gain on the investment in Navios Acquisition, a $4 million write-off of an unfavorable short-term charter, and a $3.8 million gain from the buyback of the convertible notes.

In comparison, 2009 EBITDA was affected by a $20.8 million gain from the sale of two vessels, a $6.1 million non-cash compensation from Navios Partners, and a $13.8 million unrealized mark-to-market loss on common units of Navios Partners accounted for as available for sale securities. At the time of this mark-to-market loss in 2009 the units were trading at $9.95. Since then the units have reached $19.5. The subsequent gain is not reflected in our results.

Excluding the effect of these adjustments adjusted 2010 EBITDA increased by 37.2% to $265.7 million from $193.7 million in '09. The main reason for the increase was the delivery of the newbuilding vessels to the owned fleet. The increase was mitigated by a reduction in the available days of the charter-in fleet, which decreased by 1,632 days.

Net income for 2010 and 2009 was also affected by the one-off items discussed earlier, which affected EBITDA. Net income in 2009 was also affected by a $2 million write-off of deferred financing costs following the issuance of the secured bond in 2009.

Excluding the effect of these items, adjusted net income for the year ended December 2010 increased by 42.6% to $81.1 million compared to $56.9 million in '09. The increase is mainly attributable to the increase in the number of owned vessels due to the deliveries of the newbuildings.

The increase was mitigated mainly by the increase in net interest expense due to the $400 million bond issued in the fourth quarter of '09, and the higher depreciation due to the increase in the owned vessels.

Please turn now to slide 24, where the balance sheet highlights are presented. The cash balance as of December 31, 2010, was $146.1 million compared to $173.9 million at the end of December '09. The reduction reflects the delivery of most of our newbuilding vessels, our strategy to deleverage the balance sheet, and our investment in Navios Acquisition.

The restrictive cash balance decreased from $107.2 million at the end of '09 to $19.8 million at the end of 2010. The decrease is mainly due to the use of the balance to finance the newbuilding vessels delivered in 2010.

Similarly, deposits for vessel acquisitions have reduced from $344.5 million at the end of December to $80.1 million at the end of December 2010, reflecting the delivery of most of the newbuild vessels by the end of the year.

The long-term debt, including the current portion, has reduced by approximately $260 million. As mentioned, this reflects our strategy to deleverage the Company. Net debt to book capitalization has also reduced from 52.6% at the end of '09 to 48.8% at the end of 2010.

The strategy to strengthen our balance sheet continued into the first quarter of 2011, and part of the result can be seen on the following slide, number 25.

At the beginning of 2011 we issued a new 8 1/8% eight-year bond due in 2019. We use the proceeds of this bond to replace a more expensive 9.5% bond due in 2014. And we extended the refinancing risk by almost five years. As you can see on the chart, we currently don't have any significantly refinances and until the second half of 2017.

Turning to slide 26. The Company, due to its prudent fleet deployment policy, continues to pay its dividend. A dividend for the fourth quarter of 2010 of $0.06 per share was declared to common shareholders as of March 22 to be paid on April 12, 2011.

Following the declaration of a dividend by Navios Acquisition, and in addition to a dividend received by Navios Partners, the total cash dividend inflows from the two investments exceed the cash paid out by Navios Holdings to its shareholders.

This concludes my review of the financials. At this point I will turn the call back over to Angeliki for closing remarks. Angeliki.

Thank you, George, and we open the call to questions.

(Operator Instructions). Jon Chappell, JPMorgan.

Angeliki, thanks for the update on the Korea Line charters at the beginning of the call. I was hoping you could provide a little bit more color -- I think is important -- on how the insurance works regarding the timing of payments.

And what I mean by that is if Korea Line is in receivership for an extended period time, even as you are renegotiating the contracts, how does the insurance company pay you as we think about quarterly cash payments and the cash flow statement?

We have already received the agreement from the insurance company on interim payments. So our cash flow is uninterrupted at this point. Of course, on the legal strategy we already have given the appropriate notices, as it is prudent under a legal strategy. And we are in [complete cooperation] on securing for our insurance a claim they will have against Korea Line.

But otherwise we already have received agreement. And we have -- this week we will have payments on interim period from our insurance. So our strategy four years ago to put this insurance, the counterparty insurance, it was something that has paid on the current employment.

Then also on the contract restructuring that you laid out on slide three, can you just talk about the reasons behind that? Was the charter in a difficult financial situation, why the upfront payment?

They will never be in a difficult position to give the upfront money. This is actually beneficial for their own reasons, which may be relative to what they want to have reported on every fiscal year.

They wanted us to receive a lump sum amount. That is not discounted to the present value of these cash flows. So we received the cash flow today. This was a similar case that we had a while ago (inaudible) our subsidiaries Navios Partners and we had the benefit.

Why did the ships have to be swapped? Why did different ships have to replace the current ships on the contract?

Because in essence you have to find a way to exactly -- you get a lump sum. Then you remain the contracts at the current environment. This is a way that the counterparty gets -- for their own fiscal reasons they want it. And for Navios we view it from our side, which was a very beneficial deal. So in an environment where cash -- and you have a lot of counterparties being in difficult liquidity positions, we will actually get advance payment.

Then, finally, with no major capital commitments or refinancing in the next couple of years, and as you build cash, as you put your full-size fleet now, what are your primary uses of cash?

And I guess the two things I would be considering are should we be looking for more acquisitions or would you further delever the balance sheet at this point?

I think we have done a good job on deleveraging the Company. Of course, we always are prudent on our balance sheet. But I think as we will wait for 2011 on how the year will unfold, it will give us the possibilities to opportunistically step in.

Do you think it is prudent to keep more cash on hand just because you're not sure how the banks may be in increasing their lending to the industry?

You will have a little bit more consequences uncertain times. So in this kind of uncertain times you are always better off on having additional cash.

One of the issues that we have seen today in counterparties that have not been prudent with their cash is that any default or any situation can really blow you over doing the correct actions, even legally if you're not able to have sufficient cash to operate.

Because you may have a fantastic claim, but collectible after a couple of years. And people may be -- in the short term be squeezed because they don't have the cash.

Great. Okay, thanks for a much, Angeliki.

Natasha Boyden, Cantor Fitzgerald.

I wanted to just take a look at the South American Logistics business. (technical difficulty) you gave us a lot about that. But really what are your plans regarding a potential spinoff of that business? At what point do you see that it will be ready to be in a position to be spun off?

In any way we are ready. But we see a lot of opportunities on expanding that business. We have seen with a major client, one of the mineral companies, that we have been able to leave time charters covered. And we see that there is demand for additional equipment and additional [convert down] delivered.

So on the actual demand we see very strong. We have also seen that the market -- capital equity market has in the US been coming back in a better shape. And we are looking to do something this year, because we have seen that capital markets have returned in that market, which was not the case I was saying last year.

This year they have come up. We saw [some Brazilian] things happening and being executed with total growth companies without any dividend support. And this has happened very nicely.

So I think somewhere in this year the markets will be appropriate. And we also need to see that this Company will need cash to grow on its own merit.

Okay, great, thank you. Then just looking at the period charter activity in the Panamax and the Capesize sectors, what are you seeing there in terms of interest from the charters for longer periods? Are they looking to lock up for 3 plus years nor are they still only looking at one year or so?

You know something, they should, because this is the right time, if you ask me. But the problem with this head mentality, everyone moves on the same direction at the same time. So today there is more fear than anything, which is also affected by the events -- weather events and situations that are existing in Q1. So in essence you don't see a lot of activity. You should have seen more, because today the rate makes -- for the charterers it makes a lot of sense.

But in essence you see a very flat line, one- and two-year charter period get almost the same rate. It is a pretty much flat. And what is amazing is that more or less with $1,000 difference you see the same rate for Capesizes, Panamax and Super Maxes. So it is in re flatlin, meaning that nobody wants to take a position right now.

Right, okay. And then just lastly, (inaudible) but what are you actually saying in the S&P market right now in terms of asset values and liquidity? Is there any -- is it improved at all or is it still fairly more moribund?

I think after Q4 you don't see a lot of transactions. Today the only seller is a seller that is obliged by the banks or other requirements. We see a lot of activity in the scrapping. There remains the scrapping in the first month and a half, but we don't see otherwise a lot of S&P transactions.

Speaking of what you just said about companies being forced to sell by the banks, are you actually being approached at all by the banks to look at these assets that perhaps have been now considered distressed or are you really just still dealing with shipyards?

No, the banks are coming in. And you see these starting that we -- have been materializing within the year, within the 2011 year.

Okay, all right, great. Thank you much, Angeliki.

(Operator Instructions). John Parker, Jefferies.

First I want to join, I think, all the analysts in thanking you for deconsolidating Acquisition. It will make our jobs a lot easier.

Finally, we have a nice bond analyst to see what we did.

Okay, now, I realize you're not taking large positions in the FFAs, but you still show minimal impact every quarter from FFA gains and losses. I am wondering if that is related to your short-term trading activities or is there something else going on with those P&L effects?

No, that line includes some of the short-term -- some of gains and losses on the FFAs, which are very minimal. And we also have some derivatives, some swaps that the effect we have shown in that line also.

Okay, and then the charter restructuring you mentioned earlier, what was the date of that, and how will that be accounted for? Will you accrue those cash flows over the length of the charters or will you do a one-time P&L affect of those cash flows?

We will accrue those over the life of the charters.

That will actually be lump-sums in front.

Okay, and then the -- what was the date of that transaction?

The [cash is getting] effectively end of March, which is the fiscal year.

If history is my guide, you're not going to sit on the cash that you are going to start to accumulate here. Are there any particular types of ships that you would like to buy in this environment? I know during the last downturn you did a lot of Capesizes, is there any other class of ship that you're looking -- that you think is attractive right now?

I think at this point we like to review the market to see how this develops. And I think we are totally opportunistic on that. There is not a type of vessel, but really a deal that makes sense. We are not in a hurry for anything, because I think we have to see the full unfolding of all this events, how they will be proceeding.

Then, finally, I think during the last real downturn in rates you had a lot of negotiations between ship owners and yards with cancellations and deferrals or delays of delivery. I realize you're completely out of the order book at this point, but are you hearing anecdotal stories of people going to try and stretch deliveries or canceling slots at this point?

I think that this is happening as we speak of. There is no way with the kind of market that anyone would like to get delivery on yesterday's prices. So I think this is an ongoing. We have heard the same thing from classification societies.

And also, we have seen that some of the shipyards, even South Korean yards, and are struggling at this point. So this is something that it will continue. And in our opinion that will also affect the deliveries for 2011.

Thank you very much. That is all I have.

This concludes our Q&A period. Ms. Frangou, I return the floor to you.

Thank you. This concludes our Q4 2010 results. Thank you for attending.

Thank you. This concludes today's conference call. You may now disconnect.