Paragon Shipping to Counter Downturn
Paragon Shipping Inc is at cyclical lows, as the entire drybulk shipping sector has suffered and, along with the container and LNG sectors.
Michael Bodouroglou, Founder, Chairman and Chief Executive Officer of Paragon Shipping Inc. has sent a letter to all its share holders about the measures that company has taken to counter cyclical downturn.
"I have seen these times before. I have been in marine shipping, as a shipping company founder, executive and technical superintendent supervising vessels for other shipping companies, for more than 35 years. These highs and lows are a part of life and we understand the classically cyclical nature of the business. Times like these are not only financially difficult, they are humbling as well," Michael said.
"At Paragon, we are doing the prudent thing. We are managing through the downturn, working closely with our lenders, and positioning ourselves to be able to capitalize when times change—which they will," he added.
In recent months Paragon has taken important steps to:
- Substantially reduce our costs;
- Significantly improve our balance sheet by entering settlement agreements with all lenders;
- Extinguish $135 million in debt through sale of vessels which have been cash flow negative;
- Preserve cash liquidity by raising $1 million through a series of convertible notes;
- Extend the delivery of three Kamsarmax newbuilding drybulk carriers to the third and fourth quarter of 2016;
- In exchange for 550,000 shares of Paragon common stock, entered into an agreement with Allseas Marine S.A. to write off debt, waive fees while Allseas Marine S.A. assumed all contractual shipbuilding obligations related to the construction of two new Ultramax carriers.
"It's difficult to predict exactly when the cycle will turn. The analysts who follow shipping are quite often wrong. Experience tells us that change often comes when you least expect it. And when it comes, things can change quickly," the letter said.
"We believe that better days are coming. The Baltic Dry Index has been gaining traction even after the recent Brexit vote. Market sentiment has clearly shifted in recent months, away from the depressed views back in January and February," Michael said.
