In a conference call with investors Michael Bodouroglou said his company has no immediate plans to sell the 74,000-dwt Diamond Seas (built 2001) or other ships rolling off period charters at “depressed levels” to raise cash because the group boasts a strong liquidity position.
“It is not a very old vessel by drybulk shipping standards,” he said in response to a question from Noah Parquette of Global Hunter Securities. “There is no reason to sell a fine ship at depressed levels. Luckily, we can say that because we have liquidity.”
He added: “We are in a position [where] we can burn cash in order to service all our obligations, cover our operating expenses and also our loan repayments. And it’s a nice position to be in. We have cash to burn and at some point we are expecting the market to recover.”
Bodouroglou had little to say about breached loan covenants but Natasha Boyden, Parquette’s colleague, acknowledged the issue in a client alert that came after Wednesday’s call and the release of Paragon’s second quarter earnings report.
“Paragon remains in non-compliance with the leverage ratio under one facility and the security cover ratio under four facilities,” she wrote.
“Management is in discussion with lenders to resolve this issue, which may mean more prepayments could be required.
"Given Paragon's high cash balance we don't anticipate this being a major issue.”
At the end of the second quarter the Athens-based owner of 13 bulkers and containerships said debt stood at $207m with cash and investments of around $77m and a debt to capitalization ratio of 58%, which top brass described as “moderate” in today’s market.
