Another Dividend Reduced, Another Reasonable Decision Made

In our view, the elimination or reduction of a dividend by a high yield shipping company, although unfortunate, makes perfect sense for the long-term preservation of shareholder value.

At a time when shipping companies are having a very hard time raising equity, and are at the same time pushing close to loan to value covenants on existing and to-be-delivered tonnage, it makes little sense to continue distributing excess cash to shareholders. Lest anyone forget, investing in shipping is, at its essence, like investing in call options; the more years that a ship has to trade, or a company’s equity remains in the hands of its original shareholders, the more cash it will earn and the more likely its assets will find themselves in a strong market. If there was

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