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Strategies & Market Trends : Value Investing

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To: anializer who wrote (37302)	4/8/2010 10:06:30 AM
From: Spekulatius	Read Replies (2) of 78717

Anializer - the book value seems to overstate the value of their assets (ships) on the balance sheet. I am not sure how much below stated book value FREE is - they had 140M$ in equity (before the secondary) and 120M$ in debt, yet they were in violation of their loan covenants by 12/31/08. those loan covenants are based on NAV of the tankers not the book value, so clearly the banks got worried and that forced them to do a secondary rather than getting a waiver from the lender. I also notice that FREE ships are rather old - >10 years - with a glut of new ships coming to market the value of older ships could fall even more. In order to make an investment decision we would need to be able to determine the actual value of FREE's ship, right now we don't know if FREE trades above NAV or not. Anybody has any number how much the value of ships has plunged? From memory I recite about 20% for newbuilds but I have no clue about value changes for well used ships.

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