Navios Maritime Partners LP (NMM) 2010 Q4 法說會逐字稿

Good morning and welcome to the Navios Maritime Partners fourth-quarter and year-end 2010 earnings conference call. With us today from the Company is Chairman and CEO Ms. Angeliki Frangou; Chief Financial Officer Efstratios Desypris; and Executive Vice President of Business Development George Achniotis. As a reminder, this conference call is also being webcast. To access the webcast, please go to the Investors section of Navios Partners website at www.navios-mlp.com.

Now I would like to read the Safe Harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Partners' 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 partner's filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Partners does not assume any obligation to update the information contained in this conference call.

Now I would like to outline the agenda for today's call. First, Ms. Frangou will offer opening remarks; next, Mr. Desypris will review Navios Partners' fourth-quarter and full-year 2010 financial results; then Mr. Achniotis will provide an industry overview. Finally, Ms. Frangou will offer concluding remarks and open the call to take your questions.

At this time I would like to turn the call over to Navios Partners' Chairman and CEO, Ms. Angeliki Frangou.

Thank you and good morning to all of you joining us on today's call.

I'm pleased with our results for 2010. For the full year of 2010, we increased net income by 76% and EBITDA by 66% over 2009. Moreover, during uncertain times, we run a vibrant company with a fleet of 16 vessels. And reflecting this, Navios Partners has a current market capitalization of about $1 billion and a enterprise value of about $1.5 billion.

As consistent performance has enabled us to continue access to the capital markets and (inaudible) enjoy the ability to grow our fleet and profitability. With our growth, we have been able to increase distribution over the last year. In fact, we increase distribution by about 5% since January of 2010, having announced increases for three of the last fourth quarters.

Last Friday we announced a 2.4% increase in our distributions to $0.43. This represents $1.72 on an annual basis. The quarterly distribution will be [based] on February 14 to record holders on February 9. Our goal is for Navios Partners to be accepted to the MLP universe. As we will discuss in today's presentation, we have successfully grown our asset base, cash flows and distribution to unit holders since we launched this MLP in 2007. Our acceptance into the MLP universe is a gradual model. Although we have significantly reduced the premium required over viable opportunities, the yield of Navios Partners today is almost 9%. This represents about a 50% premium to the Alerian MLP Index.

We still have some work to do, and we are working with various brands (inaudible). We are optimistic about the world's economies. Emerging markets as a growth engine of the dry bulk and emerging markets are expected to continue to outperform developed economies, while demand at the (inaudible) supply-side. We continue to monitor closely factors relating to new vessel deliveries.

There was about 38% deliveries during 2010. Further cancellations of this margin is due for [larger] are likely in 2011, especially given the state of the commercial lending market in Europe.

Navios Holdings continued to be a sponsor of Navios Partners and today is almost 30%.

Let's now turn to slide three. During 2010 we have been able to grow the asset base of Navios Partners substantially by adding five new vessels, all chartered to long-term charters. At the same time, we reduced the leverage ratio of the overall Company. We decreased by raising about $270 million in the equity capital markets.

In general, each deal was significantly more accretive than the last deal. In addition, we have been able to reduce our cost of accessing the capital once we establish ourselves as attractive to investors.

I specifically note that the last deal we concluded in October of 2010, we were able to create about $110 million and use these proceeds to purchase two Capesize new building vessels with long-term charters from Navios Holdings.

In addition to the charter, Navios Holdings accepted units of Navios Partners using a valuation formula for the partnership units that was favorable to Navios Partners. We were thus able to conclude the deal at a cost below the advertised price.

Let's now turn to slide four in connection. With the drop-downs of the Melodia and Fulvia, we increased our credit facility by about $50 million and obtained several favorable amendments. The notable changes included improvements to annual amortization. We have deferred about $32 million from annual amortization to the balloon. This amount will be paying, as I said, to the balloon and the maturity of the facilities for 2017.

We have also reduced minimum liquidity to approximately $20 million from $40 million from 2011 onwards. The new interest spread over the base rate is [165] to 195 depending on the loan to value ratio. As a result of our proactive management of our credit facilities, we have used an effective interest rate by about -- to 2.3% for 2010 from 3.6% that we paid in 2009.

Let's now turn to slide five. The vessels acquired during 2010 provided $33 million in EBITDA. However, on a full run-rate of these vessels, they will provide almost $62 million of EBITDA. Thus, we have $1 billion growth in EBITDA of about $28.6 million for 2011.

As you can see on slide six, since Navios Partners' IPO in late 2007, we have increased distribution by about 23% and our fleet by about 170%. We have been able to do this because of our multiple avenues for growth. We think that we will continue to enjoy the benefits of the Navios Group global [flow] as we seek to grow our Company.

We are also able to grow our fleet by exercising purchase options that we have and also access new opportunities in the general dry bulk sales and purchase market.

Please now turn to slide seven. You can see from this chart that the total return for our units has been significant over the past two years. For 2010 and 2009, Navios Partners increased distribution by approximately 5% and 2.5% respectively. We have also created much needed liquidity in our shares as we have an average daily volume of about 325,000, which is almost 5 times what it was in 2008.

And at this point I would like to turn the call to Mr. Efstratios Desypris, Navios Partners' CFO, who will take you through the results of the quarter and year-end.

Thank you and good morning, all. I will briefly review our unaudited financial results for the fourth quarter and year ended December 31, 2010. The financial information was included in the press release and summarized in the slide presentation on the Company's website.

In the fourth quarter and year ended December 30, 2010, we continued to demonstrate significant increase in our operating metrics, reflecting the growth of our fleet through accretive vessel drawdowns from Navios Holdings.

Please turn to slide eight. Time charter revenue for the three months of operations ended December 31, 2010, increased by 66% to $42.5 million due to the addition of five vessels in our fleet. EBITDA increased by $14.4 million or 81% to $32.2 million for the fourth quarter of 2010 as compared to $17.8 million for the same period of 2009.

Net income for the fourth quarter of 2010 increased by $7.4 million or 67.3% to $18.4 million as compared to $11 million for the same period in 2009. The increase in net income is mostly attributable to the increase in the number of vessels and was adversely affected by a $77.6 million increase in depreciation and amortization expense. $4.9 million of this comes from amortization of favorable leases attached to the acquired vessels, which is amortized over the remaining duration of the chartered out contract as opposed to the long and remaining useful life of the vessel.

Operating surplus for the quarter ended December 31, 2010, was $27.1 million, which is 90% higher from the corresponding quarter in 2009. Operating surplus is a non-GAAP financial measure used to assist in evaluating the partnership's ability to make quarterly cash distributions. During the fourth quarter of 2010, Navios Partners operated 16 vessels, an increase of five vessels as compared to the same quarter last year.

Moving on to the 12 months of operations, time charter and voyage revenues for the year ended December 31, 2010, was $143.2 million. The increase in revenue by almost 55% was mainly due to the acquisition of Navios Hyperion, Navios Aurora II, Navios Pollux, Navios Melodia and Navios Fulvia in 2010, as well as the acquisition of Navios Sagittarius and Navios Apollon in 2009, which were fully operational in 2010.

EBITDA increased by $42.6 million or 66% to $107.1 million for 2010. Please note that EBITDA for 2009 excludes the non-cash compensation expense of $6.1 million incurred in the second quarter. Net income for 2010 was $60.5 million compared to $34.3 million for 2009, an increase of 76.4%. Operating surplus for 2010 was $87.6 million, representing a 78% increase over 2009. Our fleet has consistently performed well. Vessel utilization for 2010 was 99.7%.

Turning to slide nine, I will briefly discuss some key balance sheet data for December 31, 2010. Cash and cash equivalents, including restricted cash, was $52.1 million at December 31, 2010. I note that the $91.2 million of cash on December 31, 2009, included $56.8 million net proceeds of the equity operating income completed in November of 2009. Total assets grew by 92.5%, reflecting the significant growth from the acquisition of new vessels. Long-term debt increased by $126.5 million to $321.5 million at December 31, 2010, in connection with the acquisition of the new vessels.

Navios Partners amended its existing credit facility to add four new tranches and borrowed an additional amount of $126.5 million net of $12.5 million prepayment in January of 2010 to finance the acquisition of vessels. The facility is subject to a margin and ranging from 1.65% to 1.95%.

Under the amended terms, capital repayments commenced in 2011. The net change caused a positive cash flow effect of approximately $32 million in years 2012 to 2016 from the improved amortization profile increased balloon.

The effective average interest rate for 2010 was 2.3%. With the growth in our fleet, net debt to book capitalization on a chartered adjusted basis decreased to 32.3% as of December 31, 2010, compared to 43.3% at December 31, 2009.

As of December 31, 2010, Navios Partners was in compliance with the financial covenants of its credit facility.

As shown on slide 10, our financial strength and quality growth has enabled our Board of Directors to approve an increase in Q4's cash distribution to $0.43 per common unit or $1.72 annualized. This represents a 2.4% increase over the prior quarterly distribution and a 23% increase over our minimum quarterly distribution. The record date for the fourth quarter of 2010 distribution is February 9, and the payment date is February 14, 2011.

Navios Partners has paid quarterly dividend distributions since its inception in November 2007, uninterrupted by market conditions. Total distributions amount to $21.9 million, of which $18 million will be to the common units.

We are pleased with the distribution covenants. Common unit covenant is 1.51 times, and total unit coverage is 1.24 times. For US tax purpose, Navios Partners reports the cumulative annual distributions to common unit holders on Form 1099.

On slide 11, the favorable quarterly pattern of EBITDA operating surplus and net income (inaudible) for the 12 quarters from Q1 2008 through Q4 2010. The consecutive higher results primarily reflect the significant profitable growth by the Company from increases in the number of operating vessels through accretive drop-downs. Navios Partners has increased its dividend distributions in seven out of the 12 quarters of its operation. Our current annual distribution of $1.72 per common unit provides for an approximately 9% effective yield based on Friday's closing price.

Slide 12 demonstrates our strong relationship with key participants in our industry. We have quality charters with an average remaining period of 4.6 years. We start this with a diverse group. In addition, we have ensured our charter out contracts with AA plus insurance. Our objective is to continue to grow a visible, secure and stable long-term base of revenues and distributable cash flow for our unit holders.

Also on slide 13, our fleet consists of 16 vessels -- five Capesizes, 10 Panamax, and one Ultra-Handymax vessel. Our fleet is young relative to the global drydock fleet with an average age of five years as compared to the industry average of approximately 14.2 years. Navios Partners has currently contracted 100% of its available days on a charter out basis for 2011 and 94.7% for 2012. By design, the expiration dates are (inaudible) and the chartered durations extend to the second half of 2012 at the earliest and September 2022 to the latest.

As you can see, we have no vessels coming for the Company before the second half of 2012. It is our objective to continue to grow Navios Partners fleet on an accretive basis and increase cash available for distributions.

I now pass the call to George Achniotis, our Executive Vice President of Business Development, to discuss the industry. George?

Thank you and good morning to all. Please turn to slide 14 for a brief discussion of our industry. The drivers for world GDP growth continue to evolve as emerging economies lead to world expansion.

As you can see on the left, the growth in average economies remains below pre-crash levels, while the growth of emerging economies exceeds these levels by more than 10%. On the right, you can see that growth in China, the developing economies contributes a higher percentage to total world growth than the rich economies. The IMF expects these microtrends will continue for the foreseeable future.

Turning to the next slide, since China joined the WTO in 2001, trade in dry bulk commodities expanded by 5% per year through 2010. Growth in 2011 is estimated by analysts to be at least 5%. While the primary engine of trade growth continues to be China, India, Brazil and the other emerging countries add strongly to that growth.

Turning to slide 16, the key to expanding dry bulk commodity trade is Asian industrialization. On the left, you can see that the Chinese population is rapidly moving to urban areas at an average rate of about 20 million people per year. This is like building two and a half New York Cities per year, and besides the basic infrastructure required to accomplish this task, it is also a requirement for all the associated products such as cars and appliances. China is expected to increase its urban population by over 1 billion inhabitants by 2030.

Chinese crude steel production continues to expand to meet these needs usually at the rate of growth greater than the GDP growth as shown on the upper right-hand chart. Crude steel production in China for 2010 was 627 million tons, up 11% year on year.

Note that iron ore imports were slightly below last year's totals, while domestic iron ore production was up about 21%. This reflected a return to production of domestic low-quality, high-cost capacity that had been idle in 2009 when importing iron ore prices were low.

China still imported 622 million tons of iron ore in 2010 to keep pace with high steel demand driven by infrastructure development in housing, cars and durable goods orders. This is 40% more than the total imported for 2008 and includes 2010 high iron ore prices, a tightening monetary policy, government slowdowns and rationalization of the steel industry and power reductions in the fall. Based on analyst estimates, Chinese iron ore imports should expand in 2011, but will be constrained until new iron ore mines and expansion projects come online beginning of 2012 in Brazil and Australia. Developments towards the potential continuation and expansion of Indian iron ore export bans.

Also, note that the mature economies -- as the mature economies recover, increased iron ore imports into Japan, South Korea and the EU will provide additional growth in seaborne iron ore, increasing not only the tons [tied] but also the ton miles.

Turning now to slide 17, India has taken initial steps to industrialize and urbanize similar to that which occurred in China a couple of years ago. 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 two and a half New York Cities per year and all the associated demand for infrastructure and related products. This trend has changed dry bulk trading partners worldwide for all vessel sizes. As an example, Australia and India have been the main suppliers of Chinese iron ore imports until the last few years. Since then, India's steel production increased, and the portion of ore sent to China declined, forcing China to import greater quantities of ore from outside the Pacific Rim. Indian iron exports to China declined from 107 million tons in 2009 to an estimated 99 million tons in 2010 due to increased Indian steel production and iron ore export bans imposed by one Indian state.

Indian coal imports shown on the right-hand chart have increased dramatically at a 26% compounded annual growth rate since 2006. According to the Central Electricity Authority of India, this demand will continue to substantially grow as the majority of planned new (inaudible) will be coal-fired.

India now imports more coal per year than the UK, France and Germany combined. Forecasts are for continued growth in Indian met and thermal coal imports, and Indian companies are buying coal assets around the world to ensure future supplies. These developments in India have increased seaborne demand and also increased the ton miles travelled to transport the iron ore and coal, and these trends are expected to continue.

Turning now to slide 18, the collapse of the freight market in the fourth quarter of 2008 resulted in a dramatic drop in scrapping levels in 2009 when a record 10 million deadweight tons was recorded.

The favorable market conditions in the beginning of 2010 resulted in a slower pace of scrapping to 5.7 million tons or over 1% of the fleet. As shown on the right-hand table, the recent downturn in the market, along with high scrap prices, have induced a recent increase in scrapping. In the first three weeks of January, about 900 deadweight tons went to the scrapyards. This represents a nine-month scrapping rate of about 16 million tons or 3% of the fleet. We believe that the current combination of low market rates and healthcare prices may lead to higher vessel scrapping than historically averages. 16% of the fleet is older than 25 years of age, and 24% of the fleet is over 20 years old, providing about 126 million tons of scrapping potential. At current rates, a typical Capesize vessel could earn its owners about $10 million.

Moving to slide 19, 2010 new building deliveries was 77.9 million deadweight tons against an expected 125.6 million tons, a slippage of 38%. In addition, the estimated order book for 2011 ballooned from about 120 million tons to 137 million tons as the decision to classify many ships that were not delivering in 2010 as 2011 deliveries.

We believe that this demonstrates that non-deliveries continued to be a substantial part of the dry bulk order book going forward. The order book declines in 2012 and again in 2013.

Note that in 2011 expected deliveries reflect orders probably contracted at prices significantly above the current market, making them un-economical today. In addition, reduced traditional bank financing will continue to adversely impact the market, severely cutting funding to private shipowners in favor of publicly quoted shipping companies.

Despite tight slippage in 2010, deliveries established a record year for new buildings. The 2011 order book seems to be similarly over-marked, and non-deliveries may exceed 40% of the additions. But the additions to the fleet will again be substantial.

Please now turn to slide 20 where we show the BDI. Dry bulk seaborne trade increased substantially in 2010, but by Q4 it was not enough to counteract the number of factors, mostly related to China arranging from the government's monetary tightening, steel industry rationalization and power curtailments to industry.

The new year failed to bring in good news with earnings reduced by the normal seasonal slowdown and Australian flooding, which dramatically reduced the availability of coking coal. The floods in Australia, which accounts for about 50% of global seaborne coking exports, have provided a sudden interruption to dry bulk exports. This adds to the distress being caused by weather-related interruptions to coal shipments from Colombia and in Indonesia, Russia's grain export ban, and restrictions on Indian iron ore shipments. The extent of the damage to mining operations and inland transportation infrastructure is unclear, and it becomes impossible to know the quantity of Australian exports over the coming months. Shipping market expectations are for a decline in the first quarter followed by a rebound in Q2. This is similar to the pattern of the last few years.

Navios Partners continues to operate these vessels on long-term time charters to ensure to create worthy counterparties and thus does not have any rechartering and risk until the second half of 2012.

And this concludes my presentation. I would now like to turn the call back to Angeliki for final comments.

Thank you, George, and with this, we conclude the formal presentation. We opened the call to questions.

(Operator Instructions). Jon Chappell, JPMorgan.

I have a couple of questions for you. They are all kind of related as it ties into your growth expectations for Navios Partners. First, we know the market is terrible. George just talked to that a little bit. There has not been a lot of activity, S&P activity lately, so it is kind of difficult to gauge exactly where asset prices are today. Where do you view asset prices today? What is your near-term outlook for them in terms of percentage of downside, or do you think they can hold steady, and then how does that translate into Navios Partners' ability to grow both through drop-downs but also through third-party transactions?

This is the question. The one issue I would like to see that today you have an effect of the weather conditions that exaggerates the actual trend. We can say no one is going to give you exact numbers of the drop-down or the drop in values and maybe sales around 10% on freight. And that gives you a ballpark. But then we really have to go on the specifics of the (inaudible) and give the win, when the shipyard construction and etc. This is also in addition, and listen you have to be very careful about where the vessel was constructed, the shipyards, and the construction. We have now seen that heavy vessels or heavy construction we have seen depreciating prices. This is the one issue on prices.

On the issue on Navios Partners ability to grow, I think this is a market where we can grow in multiple of ways. From drop down from the holding from our sponsor or also as we know that inevitably we will have European banks that we will need to clear their portfolio we may find additional opportunities.

This was something that is anticipated. It happened in the first wave in 2009, and I think it is inevitable that we will see it some point in 2011. So we are pleased to grow our asset base, and we have prove that. We have consistently been disciplined, and we have done our (inaudible). And now we have grown our distributions, and we have been able to provide cash flow growth and asset base growth.

Right. And you mentioned, again, in the answer to this question in your previous comments about the bank market is changing, the commercial bank markets in Europe is changing. How do you view Navios Partners' financing strategy going forward for growth? Will it have to change a little bit where there is more equity involved if you cannot get the same type of financing terms that you have been able to in the past? Can you use other unique methods like you have done with Navios Holdings' preferred stock or issuing shares directly to banks or yards for assets?

There is a different currency on Navios Partners and Navios Holdings, but we have a lot of ways we can grow that. We can in our premium -- this is the strength of Navios that we have very good relationships with our banks. We are a leading group on any relationship with all the European major banks. So we have access to the deals before (inaudible).

This is a series of (inaudible) it is inevitable that some of the structures will have to go because non (inaudible) market, non-effective, let' say, the German market. You know that the (inaudible) is closed, number one. Year-end the banks now have completed 2010, so we have to ask them how to show that (inaudible) is happening, and that is (inaudible). So this is an inevitable event of we push this into the market, and we will find ways to grow. You can see also from the way we have -- we are always very proactive on our credit facilities. We have amended our credit facilities to favorable terms during a period which usually is not possible. So we are very proactive about our ability to have access to debt on good terms.

Right. And then just one quick financial question. The maintenance CapEx reserve of $4 million in the fourth quarter, does that incorporate the two Capes for the full quarter, and should that be the quarterly run-rate that we are looking at going forward, or should we bump it up a little bit?

Absolutely you should bump it up a little bit because it incorporates the two Capes only for half a quarter, as you know. You increase it by approximately 10% in order to get to the new quarterly average.

Michael Webber, Wells Fargo.

A couple of quick questions. First to piggyback on one of John's questions, but when you think about next year or this year rather and the amount of supply that is coming online and how weak the overall market looks, has that changed your view on your coverage ratios at all or how you think about reserving? You guys are already pretty conservative to that end. But has that methodology, that ballpark thus shifted, or do you that shifting as we move through what could be a more difficult patch in the dry bulk market?

Our strategy is conservative as it is so we want -- I mean we do things which are very profitable, and we have grown the Company in a consistent way. Also, you have seen our distribution in a very consistent way. I think 2011 is a year that because we have raised (inaudible) our balances and we are -- I think we have raised this capital, we will be able to capture opportunities either from drop-down from third-party builds via the bank. So I think we are very well positioned for opportunities in 2011, and we hope with that to increase our asset base, cash flows, and then have a similar -- I mean let's not forget that in 2010, we grew higher dividends three quarters out of the 4. So we think this is something that the way we are positioned we are able to achieve. Don't forget that you have zero in charter lists out in the second half of 2012. This makes you -- and you have an average duration of four and a half years. So, in essence, it makes the current market conditions almost irrelevant. It is just an opportunity to use your balance sheet to acquire more vessels.

Sure. That makes sense. Kind of tied into the current market, you touched earlier on asset values. Can you talk a little bit about what you're seeing in terms of the liquidity of the long-term charter markets and whether or not there are a lot of deals being done right now at current levels and then maybe how some of the current weather issues and supply issues might be impacting people's willingness to go out and lockup tonnage on a longer-term basis?

I think today you're not going to be able to do long-term deals, which is whatever exists from previously. So, in essence, this is either deals are going bad and or sitting on the balance sheets of banks or other deals that exist, you are not going to be able today to go and do -- I mean I am just going to buy export vessels, which is a totally different strategy that does not apply to Navios Partners. Or you would be able to find the run of the vessels we have already chartered at attractive rates where people will -- owners that are unable to bring the equity that is needed.

Justin Yagerman, Deutsche Bank.

I wanted to ask a few questions here. On the back of the question earlier on common unit coverage, do you guys have a target that you officially put out there? I don't think we have heard one from you recently. And, as you're thinking about going through this year where it may be a little bit more difficult to find growth -- we will have to see -- how do you think about the common coverage? Is there a specific number that you guys have as a comfort level on the threshold?

I think where we are today and I mean we now have reported in page 10 of the presentation you can see in a very MLP way, we have a double (inaudible) coverage of about 124, and that is something that we feel very comfortable, and this is we are not also in line. We can easily between [116] to 120 at the very comfortable level. Because (inaudible) the quarterly; it is not cumulative. The cost to the Company is even higher.

You know, you made a comment earlier about the current market being somewhat irrelevant. I think you guys are in a little bit of a unique position in terms of that because of the structure of holdings and partners and the opportunities for value creation that you guys have. When you think about that and the equity markets, do you see the ability to continue to issue equity at the pace that you have been if the market remains the same as it is right now from a fundamental standpoint?

And then I guess a follow-up to that is, do you think that the size of the last transaction is repeatable or even growable in this type of a market where maybe you speed up some of the pace of drop-downs?

What we care is to give substantial (inaudible) to our shareholders. So if we can repeat what we are doing, we do not care about -- we never have a number or a access -- a number of lessons or the size of a transaction. I think what makes it is how we are creating (inaudible).

So if we can do bigger deals, so be it. So basically there is no side that makes the deal. It is the economic rationale behind it. And with that, we are very disciplined. I mean you have -- we have done very consistent moves. You have seen how we perform in 2000 and how we continue to perform in 2010.

Our strategies have not changed. We are looking on giving total returns to our shareholders by increasing our asset base, by increasing our cash flows and having a model that can weather any market conditions.

We do not have a case of when to know when the market will recover, but I like maybe to bring us a surprise. So, as you have seen, we were early re-chartering our vessels in 2010, so we can have a hiccup on the year-end. And on the other side, we have all the ability to grow our Company for you in a more sensitive where others are going to have to pull back.

Okay. On a slightly different topic, you guys have been one of the few companies that has been able to identify distressed deals both on the dry and wet side in this market. It sounds like you are a little iffy on where assets asset values are heading right now and given the market that is not really shocking, are you talking to banks right now? And if things stay the way that they are, do you think that this is a year where we might actually see some distressed deals come to market in a bigger way? There has been very few thus far, which has been surprising as banks have been pretty reluctant to take marks on their books. Is that something that might happen in 2011 in your conversations?

I think this is a judgment call. Our view internally is that this will have to happen at one point because it will be also (inaudible) like European Union. I think we have to somehow reflect mark-to-market what is happening on our portfolio. I think for a long period we were able to not really show corporate -- the corporate book, but at one point we have to appear. So I think 2011 inevitably will oblige additional deals to come up more than before.

Okay. And then lastly, following up on -- I know you guys have your insurance policy, so there is not really a worry from a Navios standpoint. But has Korea Line been talking to you guys about your charters? They have been in the news as a company counterparty that has been going around and talking to their various counterparties and trying to renegotiate a bit.

We have not had any contacts, or there is nothing that we -- if we had, we would have to report it. But we did not have any -- we are not -- mostly this is something that is available in the market. Don't forget Korean Inc., as they call it in general, they always somehow support the governments support or the banks support their big companies. So again, yes, there is, but almost you have to take into consideration it is not exactly different kind of practices there.

Ken Hoexter, Bank of America/Merrill Lynch.

It is Scott Weber in for Ken. A lot of my questions have been answered. Just one or two here. If the goal for new acquisitions is to extend the average charter duration of the current fleet, and right now charters are not really offering attractive long-term rates right now. Doesn't that prevent you from adding distressed vessels without -- that might be without charters? How far out are charters locking up vessels or offering rates that remain attractive?

Plenty of vessels with long-term charters. The whole strategy of Navios Partners is a strategy of long-term charters. So yes, Navios Partners will never acquire a vessel that is ported without (inaudible) because that would be an expensive vessel for us.

So that is a vessel that would meet -- can go to another, can go to Navios Holdings but not in Navios Partners. Navios Partners because we have the distribution and we have to have an accretive deal, we only -- we have to look, of course, on values, the age of the vessel, the value, but also you need to have long-duration spread. And you can see we have plenty of candidates on Navios Holdings, our sponsor. There's also plenty of deals in the market we could have [peaked] the portfolios of the bank.

So we have a lot of deals. You have to be selective. You have to care about the quality of the cash flow and the duration of the cash flow and also to improve the age profile of the fleet and to prolong the duration of the charter. This is something that has protected us on all kind of markets, and we have to keep this. This is a disciplined way of having high distribution.

Okay. That is helpful. And you mentioned that the quarterly net amortization change to the credit facility has a positive cash flow effect. Did you say that that was positive immediately or in some of the out years?

What we have done basically (inaudible) the facility. We are starting repaying in Q1 of 2011, and we have shifted from 2012 until 2016 approximately $32 million of payments, and we have shifted that to the volume, which is due in 2017.

Okay. Got it.

We use a liquidity from $40 million to $20 million, which has a further positive effect, and I think what has -- as we have this excess ability, we are able to improve our interest rates costs as you go through the year.

Okay. Perfect. Thanks. That is all I had.

At this time we have no further questions. I would now like to turn the floor back over to Ms. Angeliki Frangou for any closing remarks.

Thank you for attending our Q4 results. Thank you.

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