Costamare Mulling Ship Purchases as Competitors Struggle

Owned by Costamare, the M/V Sealand Michigan is a 2000-built, 6,648 teu containership on an 11-year time charter to A.P. Moller-Maersk.

(Bloomberg) — Costamare Inc., the Greek owner of 46 chartered container ships, is looking to acquire more vessels as asset values in the shipping industry fall, even as many rivals struggle to make profit amid low prices to carry freight.

“We make sure that everywhere the markets go, we are well- capitalized and that we can make acquisitions and investments if opportunities arise,” Chief Financial Officer Gregory Zikos said in a phone interview today. “While we’re not going to be buying just to be buying, we will if the numbers make sense.”

The shipping industry has been struggling with high fuel costs and falling charter and freight rates, mainly caused by an oversupply of vessels, which has put pressure on earnings. Many European banks have also exited ship finance, exacerbating the crisis as operators have found it harder to refinance debt or raise funds for fleet renewals and investments.

While Athens-based Costamare seeks potential acquisitions, many shipping companies in Germany, home to the world’s largest container fleet, are struggling. About 28 percent of German shipping companies are likely to scale back investments in the coming 12 months while 8 percent will pull vessels from service because of the industry’s crisis, according to a survey by PricewaterhouseCoopers LLP that was published on June 19.

Since early 2011, Costamare has spent $1.2 billion on new ships and acquisitions of second-hand vessels, including the purchase in April of two container ships built in 1998, with capacity of 3,842 standard boxes each, for a total of $24.9 million, Zikos said.

Costamare shares fell 1.9 percent to $13.82 at 11 a.m. in New York, bringing their drop to 2.4 percent this year.

Finance Arrangements

The company, which counts A.P. Moeller-Maersk A/S, Hapag- Lloyd AG and Mediterranean Shipping Co. as customers, charters its container vessels to other shipping companies. All of its 46 ships are profitable, Zikos said. The company also has orders for 10 newly built vessels.

Costamare is looking at buying ships with and without a time-charter agreement, as well as new ships to renew its fleet, Zikos said. The company, which had cash and cash equivalents of $321 million at the end of March, has access to capital markets, cash flow from current vessels and the potential to increase the leverage on some existing vessels or use banks for funding for “the right transaction,” he said.

“If there’s deal there, we’re able to do it,” Zikos said.

By Niklas Magnusson, Copyright 2012 Bloomberg.

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