Excel Maritime Improves TC Contract – Analyst Blog

Maritime Carriers Ltd. (EXM), a leading worldwide seaborne transporter for dry bulk cargoes, recently improves and consolidates the time charter contracts for its fleet. The company announced that it has entered into a time charter agreement with a first class European charter for its Panamax bulk carrier M/V Powerful. The duration of the agreement will be a minimum of 11 months and a maximum of 13 months.

 

With this new time charter deal, Excel Maritime now secured under time charter employment 65% of its operating days for the rest of 2010 and 45% for the next fiscal ending December 31, 2011. The situation has markedly improved from where it was at the end of the second quarter of fiscal 2010. At the time, management announced that it  had secured under time charter employment just 63.1% of its operating days for the rest of 2010 and a mere 18.2% for the next fiscal ending December 31, 2011.

 

Reduction of large spot exposure will undoubtedly help Excel Maritime consolidate its financials going forward. Continuation of global economic recovery, although at a very slow pace, together with better than expected August manufacturing growth of both the U.S. and China will also help the company sustain its businesses.

 

As a leading global dry bulk carrier, Excel Maritime is capitalizing on its established reputation for maintaining high standards of performance, reliability, and safety. In the second quarter 2010, Excel Maritime made an additional payment of $28 million under its existing $1.4 billion credit facility. With this, the company becomes fully complaint under the covenants of the credit facility. The company is progressing well in de-leveraging its balance sheet. At the end of the second quarter 2010, debt-to-capitalization ratio was 0.40 compared with 0.43 at the end of fiscal 2009.

 

We maintain our long-term Neutral recommendation for Excel Maritime. Currently it is a short-term Zacks #3 Rank (Hold) stock.