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Live from Posidonia

Shipping giants discuss trembling legs, public money and lessons learned

Shipping giants discuss trembling legs, public money and lessons learned
In 90 minutes of discussion a panel of industry leading shipowners established and newcomers alike discussed the issues around taking shipping companies public and raising capital.

Speaking in Athens at the Tradewinds Shipowners Forum at Posidonia 2014, the panel shared their experiences going public and what they might have changed with the benefit of hindsight.

Nikolas Tsakos, president and ceo of Taskos Energy Navigation, a pioneer of taking shipping public reflected on his ownexperience: "One of the things I think we would have done different in hindsight is, when we went public, we went public to Oslo as it was at the time the most liquid stock exchange. I think we spent more time trying to educate people who know about shipping like the Norwegians, about shipping. They have a huge experience and tradition and history in shipping, we should have crossed the Atlantic earlier than 2002 where the real liquidity is and educated that side of the market. If we'd have been there five years earlier in the United States, perhaps it would have been better."

Emanuele A Lauro, chairman and ceo of ScorpioGroup recalled a challenging call that proved a turning point in the development of Scorpio: "We realised we were buying the wrong assets. We went out to our investors, we raised our hands and said we'd made a mistake. The ships that we had bought last year, they have gone down in value to a greatextent and we need to reverse this trend and the only way we can do this isbook the losses, sell the ships and go into this new fuel efficient space."

"It was a very bold move, I remember my legs shaking on that very call when we were talking to our shareholders and saying that we were taking a $66m impairment on a $200m company born the year before. That was the pivotal point for us, so I guess if you have integrity, keep it simple and that's the way we do it."

Timing was a critical component in the emergence of shipping as an asset class according to Navios chairman and ceo AngelikiFrangou: "It was important that the spotlight was on shipping in the capital markets was in the down cycle. Shipping is no different in private companies and private markets, you have to have conservative attitudes, you have to have risk management, make sure that your chartering strategy is correct for thedebt you have and that you have the people to really manage with good low costs.

"All it really means is that you are able to transact in the low point of the cycle, and that's where traditional shipowners make their money. Being able to be a full cycle model is a very important thing."

When prompted on the potential market reaction should there be a further market downturn, Frangou expressed her confidencethat the market was learning more about cycles, and that if the industry can show across a cycle that an investment is more profitable than investing in a bank, and if sound business practices are applied, it will bring maturity to the sector.

"I think that was is important is that when you are able to raise capital on the markets, you should do it then rather thanwait until you need capital," commented Evangelos Marinakis, director and chairman of the board, Capital Product Partners. Marinakis went on to compliment the performance of his fellow heads of public companies. "All of us, we have faced circumstances unprecedented and I think so far we have navigated in the best possible manner."

Sole private owner on the panel, Athanasios Martinos, managing director of Eastern Mediterranean Maritime, admitted he has spent some time considering the benefits of going public. "I have flirted with the idea of going public, not for the reason of capital, but for the continuity. I would not exclude in the future that we go public, but perhaps in a European venue. I think it is a trend for big shipping that a bigger percentage of Greek shipowners will be public in the future."

George Economou, Dryships chairman and ceo, repeated his call to arms from earlier in the week at Posidonia, "When you see the returns in shipping being low and for the foreseeable future not being very high, it is natural to go to other sectors. The problem with going to other sectors is that at the beginning you might lose money, that is the price for entry. I have urged time and again everyone that can to look at the offshore sector, there is no reason that the Greeks cannot excel in more than the traditional dry bulk, tanker and container."