Eagle Bulk Reworks Charter Pacts With Troubled KLC

NEW YORK (TheStreet) -- Eagle Bulk Shipping (EGLE) said it had reworked a series of charter agreements with one of its main customers, Korea Line Corp., a troubled shipper that was forced to enter receivership earlier this year as rates for dry-bulk services collapsed amid an oversupply of new vessels entering the market.

Under the new pacts, KLC will charter ten of Eagle's ships at $17,000 a day for each of those vessels. That's down from about $18,400 a day under the original charter agreements. The average going rate on the spot market for those types of ships, known as Supramaxes, stood at about $16,700 a day as of Friday, according to the Baltic Exchange, a London ship broker that tracks ocean-going freight rates around the world. The market remains depressed; a year ago, Supramax vessels were fetching a little more than $34,000 on the spot market.

Eagle said that two "newbuildings," or ships currently under construction at shipyards and expected for delivery later this year, will be also be chartered to KLC for $17,000 a day. One other ship didn't see a change in its charter agreement with KLC. Under that agreement, Eagle receives $18,300 a day.

When KLC's bankruptcy first came to light in late January, investors feared that Eagle would be exposed to significant counter-party losses. Eagle's stock was trading at more than $5 before the news emerged. It has yet to recover, finishing Friday's session at $3.93, up 2%.

In mid-February, KLC announced that it would enter "rehabilitation protection" under a South Korean court.

Other dry-bulk stocks were mixed Friday. DryShips ( DRYS) led the pack, gaining 2.5% to $4.90. Diana Shipping ( DSX) ended the session up 9 cents to $12.12, Genco Shipping & Trading ( GNK) rose 15 cents to $11.23, and Excel Maritime ( EXM) slipped a penny to $4.43.

Dry bulk rates on the spot market have recovered some since cratering earlier in the year. According to the Baltic Exchange, the average daily fee for a Capesize ship, the largest dry-bulk freighters in the world, rose to $10,700. In February, rates for the same vessels were averaging about $5,000 a day.

-- Written by Scott Eden in New York

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