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Precious Shipping boss Hashim sounds dry bulk bankruptcy warningPrecious Shipping boss Hashim sounds dry bulk bankruptcy warning

Precious Shipping md Khalid Hashim is warning of a wave of bankruptcies in dry bulk shipping and as owners find themselves unable to raise additional cash and banks “pull the plug” on doubtful loans.

Marcus Hand, Editor

February 10, 2016

2 Min Read
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With dry bulk rates across aboard at below cash breakeven level Hashim noted in the company’s annual review that logically speaking such a situation should not last long. However, he went on to quote economist John Maynard Keynes that, “Markets can stay irrational far longer than you can stay solvent.”

Bearing this in mind looking at the Baltic Dry Index (BDI) for 2016 he said: “We therefore think that the BDI will not push much lower than where we are today and will remain range bound within 350 to 750 points for the better part, or all, of 2016.” The BDI dropped to a new low of 291 points on Tuesday.

As a result this will leave dry bulk shipping companies needing to raise cash in 2016. Making a bleak prediction Hashim stated, “Most dry bulk shipping companies, especially the smaller and non-listed ones, will simply give up as they will not be able to manage against such overwhelming odds.”

The companies that would survive would be those that could cut “operational costs to the bone without comprising safety”, sell non-core assets to raise cash, call in funds from shareholders, and raise funds from sources such as bonds and leases. Hashim warned that companies unable to do this could face difficulties with their banks.

“It may come as a nasty surprise that Banks are now relooking at their ‘pretend and extend’ policy they have followed since 2008 and are seriously considering ‘pulling the plug’ on their doubtful loans.”

Any new financing would be “very conservative” both in pricing and loan-value-ratios.

“Do not be surprised to see more bankruptcies and action brought on by the lending banks on borrowers who have failed to show performance in terms of raising additional funds to bolster their liquidity to at least partially service their debt since their shipping revenues are probably not going to be able to do that this year,” Hashim concluded.

About the Author

Marcus Hand

Editor

Marcus Hand is the editor of Seatrade Maritime News and a dedicated maritime journalist with over two decades of experience covering the shipping industry in Asia.

Marcus is also an experienced industry commentator and has chaired many conferences and round tables. Before joining Seatrade at the beginning of 2010, Marcus worked for the shipping industry journal Lloyd's List for a decade and before that the Singapore Business Times covering shipping and aviation.

In November 2022, Marcus was announced as a member of the Board of Advisors to the Singapore Journal of Maritime Talent and Technology (SJMTT) to help bring together thought leadership around the key areas of talent and technology.

Marcus is the founder of the Seatrade Maritime Podcast that delivers commentary, opinions and conversations on shipping's most important topics.

Conferences & Webinars

Marcus Hand regularly moderates at international maritime events. Below you’ll find a list of selected past conferences and webinars.

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