M/V Maersk Madrid. Photo Diana Containerships

M/V Maersk Madrid. Photo Diana Containerships

By Lambros Papaeconomou

Diana Containerships Inc. (DCIX) announced today that it has agreed to sell the 1989-built MAERSK MADRID for demolition for a sale price of approximately $8.8 million before commissions.

At the outset, this might appear as a setback for the fledgling company.  The company had purchased the vessel less than two years ago for $22.5 million.  The carrying value for the vessel as of December 31st 2012 was $19.9 million according to the company’s annual report filed with the SEC.  On this basis, I expect Diana Containerships to book an accounting loss of $11 million during the second quarter of 2013.

But on a cash-flow basis, the company has fared much better or, to be exact, less worse.  Diana Containerships had purchased the vessel with a two-year leaseback above-market charter at a gross rate of $21,450 per day.  Assuming a market rate of $8,000, the company was able to generate approximately $10 million of additional operating cash flow during the past two years.

Against adverse freight market conditions, and with MAERSK MADRID about to be redelivered from its lucrative two year charter,  the company made a difficult but prudent decision to scrap one of its older vessels.

About the Author

Lambros Papaeconomou is with NYFEX Asset Management LLC, providing equity research for the shipping industry.

Tagged with →  
Share →
  • http://m2gaming.com/entry.php?58-Tips-To-Quit-Smoking-With-Electronic-Cigarette electronic cigarette roller

    I am really enjoying the theme/design of your weblog. Do
    you ever run into any browser compatibility problems?

    A handful of my blog readers have complained about my
    blog not working correctly in Explorer but
    looks great in Firefox. Do you have any advice to help fix this problem?

  • http://madridquever.over-blog.com/ Marta

    Hi colleagues, how is everything, and what you wish for to say concerning this paragraph, in my view its really remarkable in support of me.

    • Jerry Gav

      You drunk or what…?

Sign up for the gCaptain Newsletter!

Over 31,000 people receive the gCaptain email newsletter every single day. Get the maritime and offshore industry headlines that matter sent straight to your inbox. Or LIKE us on Facebook!

We will not share your email address with anybody for any reason