More Bankruptcies Likely as General Maritime Files Chapter 11
NEW YORK (TheStreet) -- General Maritime (GMR), a crude oil transporter via ocean tankers, filed for Chapter 11 on Thursday and Cantor Fitzgerald senior managing director Natasha Boyden expects more bankruptcy filings in the sector.
Declining to name what companies she anticipates might file for bankruptcy protection, Boyden noted the down economy as well as overabundance of ships that were ordered two years ago across the sector helped to place several companies in a bad spot.
"This is a wake-up call," Boyden said, adding she wasn't surprised by the bankruptcy filing. In fact, she had been calling for it for weeks.
The shipping sector is apt to experience more pain for at least the next six to nine months, Boyden said. She thinks there might be a recovery of the sector at the end of 2012 or beginning of 2013."Values across the shipping sector will be negatively impacted by the the lack of bank financing over the next 12 months," said Pareto Securities analyst Martin Korsvold said. Deutsche Bank analyst Justin Yagerman said in a report that General Maritime "hopes to finalize negotiations and documentation by December 2011 and reemerge in April 2012. Boyden has a buy rating on transportation services company Navios Maritime (NNA) because long-term contracts the company has will help it weather market downturns. General Maritime said it will get a $175 million equity investment from Oaktree Capital. The company also received a commitment for up to $100 million in new debtor-in-possession financing from a group led by Nordea Bank Finland. General Maritime shares haven't traded Thursday. The stock closed at 16 cents on Wednesday. -- Written by Alexandra Zendrian
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