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Transcript of demo-1. bulk shipping industry, as in February the charter market reached the lowest levels seen...

  • Seanergy Maritime Holdings Corp.

    A N N U A L R E P O R T 2012

  • Seanergy’s Fleet IΙ

    Financial Highlights III

    Chairman’s Review IV

    Chief Executive Officer’s Review V

    Board of Directors and Officers VII

    Seanergy Αnnual Report 2012

  • II

    Our Fleet The following table provides information with respect to the Company’s owned fleet:

    Vessel Name Vessel Class Capacity (DWT) Year Built

    Bremen Max Panamax 73,503 1993

    Hamburg Max Panamax 73,498 1994

    Davakis G. Supramax 54,051 2008

    Delos Ranger Supramax 54,057 2008

    Total 255,109 12.1

    Fleet Employment

    Vessel Name Charter Type Charterer Charter Latest

    Expiration Date Daily Charter Rate (Gross)

    Bremen Max N/A N/A N/A Spot Positioning

    Hamburg Max T/C Cargill Oct. 2013 Spot Positioning

    Davakis G. T/C Norden A/S, Copenhagen Aug. 2013 Spot Positioning

    Delos Ranger V/C Louis Dreyfus Commodities Suisse S.A. Oct. 2013 Spot Positioning

    Seanergy’s Fleet

  • ANNUAL REPORT 2012 III

    2011 2012

    Selected Income Statement Highlights

    Net Revenues $104,060 $55,616 Vessel Operating Expenses -$34,727 -$26,983 Management Fees -$2,991 -$2,213 General and Administrative Expenses -$8,673 -$6,739 Vessel and Goodwill Impairment Losses, Losses on Sale of Vessels -$201,905 -$167,098 EBITDA -$148,125 -$162,095 Adjusted EBITDA $53,780 $5,003 Interest and Finance Cost, Net -$13,422 -$12,421 Net Loss -$197,756 -$193,768 Loss per Share -$27.04 -$16.74 Weighted Average number of Shares (Split-Adjusted) 7,314,636 11,576,576

    Selected Balance Sheet Highlights

    Current Assets $43,432 $52,086 Cash and Cash Equivalents $37,294 $6,298 Net Vessels $381,129 $68,511 Current Liabilities $58,697 $222,577 Current Portion of Long Term Debt $45,817 $208,649 Long Term Debt $300,586 - Total Stockholders’ Equity $76,923 -$101,617

    Selected Cash Flow Highlights

    Net Cash Provided by Operating Activities $26,439 $2,418 Net Cash Provided by Investing Activities - $55,402 Net Cash Used in Financing Activities -$62,492 -$71,256

    Selected Operational Highlights

    Fleet Utilization 95.1% 86.3% TCE Rate $14,524 $7,465 Daily Vessel Operating Expenses per Vessel $4,757 $4,189 Daily Management Fee per Vessel $410 $344 Daily General and Administrative Expenses per Vessel $1,188 $1,046

    Financial Highlights

  • IV

    Dear fellow shareholders,

    2012 was a particularly difficult year for dry bulk shipping industry, as in February the charter market reached the lowest levels seen since 1986 owing to a combination of vessel oversupply and uncertainty about economic growth prospects. A modest improvement in sentiment was evident in the second half of the year, as China’s announcement of fiscal stimulus and central banks’ monetary accommodation provided a more stable backdrop.

    Looking beyond volatility in market sentiment, the underlying demand fundamentals for dry bulk shipping remain positive as witnessed by the increasing volume of trade in recent years. Energy generation, infrastructure development and residential housing in developing countries are supported by favorable demographic dynamics and are not expected to abate in the coming years, even as economic growth expectations for China seem to trend downwards. Furthermore, the expanding supply of dry bulk commodities in many parts of the world is likely to spur increasing volumes of seaborne trade as well as an increase in distances travelled due to shifts in trade patterns.

    Vessel oversupply remains the main cause for low charter rates as in 2012 the world net dry bulk fleet growth was about 10% given that the new-building vessel deliveries override the record demolition sales of about 34 million DWT. Since the start of 2013 net dry bulk fleet growth has amounted to 3.3%, while a further 58 million DWT of additional capacity is scheduled for delivery until the end of the year. So far, demolition activity has been strong with volume having fallen by 25% year on year.

    From 2014 onwards, there is going to be a sharp drop in vessels’ deliveries and the rate of growth in fleet supply is expected to match that of demand growth.

    For Seanergy, 2012 was a transformational year, as we have worked extensively with our lenders in order to ultimately arrive at a capital structure that is going to ensure the viability of the company and support long term growth. In this context we have managed to reach final agreements with three of our five lenders in 2012 and with the fourth lender during 2013, which have resulted in significant debt reduction. Our aim now is to reach an agreement with our remaining lender in order to complete our restructuring plans.

    We are currently in the low end of the dry bulk market cycle and opportunities exist that may offer long term investors favorable returns. Seanergy is working diligently to position itself to take advantage of the eventual upside of the dry bulk market and to share this upside with its shareholders.

    Lastly, it is our priority to ensure the continuation of the excellent operational track record that has so far characterized our company.

    On behalf of Seanergy’s Board of Directors, I would like to thank our shareholders for their continued support of our Company.

    Sincerely, Dale Ploughman Chairman of the Board of Directors July 2013

    Chairman’s Review

  • ANNUAL REPORT 2012 V

    To the shareholders of Seanergy,

    In this challenging market environment, we have begun working proactively with our lenders and advisors since 2012, to restructure our debt obligations so as to strengthen our financial position and capital structure. This process, when completed, will enable Seanergy, to significantly improve its balance sheet with considerably reduced liabilities in order to position the Company ahead of the widely anticipated rebound of the maritime industry.

    Over the course of 2012 and to date, we managed to reduce our indebtedness to $135 million, from $346 million, through finalized agreements with four of our five lenders. We are now in advanced discussions with our remaining lender, aiming to complete the restructuring of our outstanding debt.

    In connection with the debt restructuring, we sold 16 vessels, including our 100% ownership interest in Bulk Energy Transport (Holdings) Limited and seven MCS subsidiaries. Our strong banking relationships have been of paramount importance during this difficult time, which al- lowed us to discharge debt liabilities significant- ly higher than the disposed assets. Looking be- yond the restructuring process, we will continue to work tirelessly towards our goal to rebuild our fleet and become an industry leader.

    In regards to our financial performance in 2012, it was adversely affected by the low freight markets. The oversupply of new tonnage entering the market continued to lead to a weak dry bulk environment. As a result, our vessels were employed at significantly lower rates achieving an average daily Time Charter Equivalent rate, for the year, of $7,465 per vessel per day. A figure that is almost half of what we achieved in 2011 of $14,524. As a result our net revenues were down 47% compared to the previous year.

    On an encouraging note, we continued to de- liver a first-rate service to our highly reputable charterers and this will continue going forward. Our strategy will remain to employ our vessels on short period charter so we can take advan- tage of upswings in the market with a focus on the cost cutting measures initiated in 2011 that will support profitability. With an established technical manager, we believe that Seanergy today has highly competitive daily operating expenses as well as general and administrative expenses and fleet management fees.

    Our mission since inception is to profit from positive long term fundamentals in the dry bulk shipping industry. We believe that currently as- set values are at historically low levels, which present a unique investment opportunity as it is expected to allow investors to profit from the ensuing rebound in the market.

    We expect rates to remain firm for the remainder of 2013 and strengthen in 2014 with the decrease of the scheduled new building deliveries. According to industry reports, dry bulk shipping demand growth is expected to be 6% in 2014 with fleet growth of 4%, net of slippage and removal of older tonnage. Therefore we expect substantial relief from the record high fleet growth experienced in 2012 of over 10% and about 15% in 2011. China continues to play an integral role for dry bulk shipping demand, as the new government has pledged record funds and unprecedented commitment in infrastructural growth. We expect that the current plan will continue its implementation over the next years and that the Chinese government will ensure that the proper policies are in place that will sustain China’s growth.

    Furthermore, we expect India to also lead to the support of a rise in the volume of transported

    Chief Executive Officer’s Review

  • VI

    dry bulk commodities as the trade is a vital link to industrial production and electricity generation. Domestic supply of utility coal in India is not expected to meet the rise in energy demand and this will result in an increase in imports into the country. Lastly, the population growth in the Far East, specifically in Asian developing countries will also lead to an increase in grain trade as tota