General Maritime (GMR)

Q1 2011 Earnings Call

May 11, 2011 8:30 am ET

Executives

Jeffrey Pribor - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Peter Bell - Manager and Commercial Director of General Maritime Management LLC

Peter Georgiopoulos - Founder, Chairman and Chief Executive Officer

John Tavlarios - President and Director

John Georgiopoulos - Executive Vice President, Secretary and Treasurer

Brian Kerr - IR

Analysts

Robert MacKenzie - FBR Capital Markets & Co.

Gregory Lewis - Crédit Suisse AG

Justin Yagerman - Deutsche Bank AG

Michael Schlembach

Justine Fisher - Goldman Sachs Group Inc.

Salvatore Vitale - Sterne Agee & Leach Inc.

Presentation

Operator

Good morning, everyone, and welcome to General Maritime Corporation's Conference Call to discuss the company's 2011 first quarter results. Today's call is being recorded. [Operator Instructions] A replay of the call will be accessible anytime during the next 2 weeks by dialing (888) 203-1112 for U.S. callers and (719) 457-0820 for non-U.S. callers. To access the replay, please enter the code 9206809. At this time, I'd like to turn the conference call over to Mr. Brian Kerr. Please go ahead, sir.

Brian Kerr

Welcome, ladies and gentlemen, to the General Maritime Corporation Conference Call to discuss the company's first quarter results. I would like to remind everyone that this conference call is now being webcast on the company's website, www.generalmaritimecorp.com. There are additional materials related to our earnings announcement, including a slide presentation on our website.

You should be aware that in today's conference call, we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. For a discussion of factors that could cause results to differ, please see the company's earnings press release that was issued yesterday and the company's filings with the Securities and Exchange Commission, including without limitation, the company's annual report on Form 10-K for the year ended December 31, 2010, and its subsequent reports on Form 10-Q and Form 8-K.

Now I'd like to introduce Mr. John Tavlarios, President of General Maritime Corporation.

John Tavlarios

Good morning, and welcome to General Maritime's First Quarter Earnings Conference Call. With me today are Peter Georgiopoulos, Chairman; Jeff Pribor, Chief Financial Officer; and Peter Bell, Head of Commercial Operations. As outlined on Slide 3 of the presentation, we'll begin today's call by discussing the highlights of the first quarter and year-to-date events, including the completion of an amended $550 million revolving credit facility and $200 million of Oaktree investment. Jeff will then review our financial results and provide further details on the Oaktree investment and bank refinancing. Following this, I'll provide some remarks on our company outlook and an overview of the industry. We'll then be happy to take your questions.

I'll begin on Slide 4. Excluding the non-cash items mentioned, the company recorded a net loss of $26.5 million, or $0.31 basic and $0.31 diluted loss per share, for the 3 months ended March 31, 2011. On Slide 5, we provide an overview of the important steps we have taken during the first quarter and year-to-date to strengthen General Maritime's capital structure and balance sheet.

First, we completed the sale lease-back of 3 MR [medium range] products tankers, enabling the company to generate proceeds of $61.7 million, and we paid the $22.8 million bridge loan with a portion of these proceeds. Importantly, the transaction was structured in a manner to allow the company to retain commercial control of the vessels and the option to repurchase the vessels, positioning General Maritime to take advantage of potential future increases and asset values.

Second, as part of our fleet renewal strategy, we completed the sale of 4 vessels with an average age of approximately 19 years. In addition to improving the age profile of our fleet, we saved approximately $12 million in dry dock costs associated with these vessels and generated proceeds of approximately $33.6 million, which was used to repay debt.

Third, we completed a 26.5 million share offering, generating proceeds of $50 million. A portion of these proceeds and borrowings under our 2010 credit facility were used to fund the purchase of the seventh and final Metrostar vessel.

Finally, we drew upon our strong relationships with the capital markets and our banking syndicate to complete the previously announced refinancing initiatives. Specifically, we completed the syndication of an amended $550 million revolving credit facility and $200 million Oaktree investment. By completing these important and favorable transactions, management has provided shareholders and bondholders with a broad financing package designed to increase the company's liquidity and financial flexibility by reducing its near-term cash requirements.

Specifically, this process enables us to eliminate remaining scheduled amortization payments on the 2005 credit facility, reduce the company's senior bank debt by $188 million and amend and extend the company's existing 2005 revolving credit facility on favorable terms and ahead of the facility's $600 million maturity in October 2012.

Turning to Slide 6, I'll highlight key terms of the amended $500 million revolving credit facility and $200 million Oaktree investment. Based on a thorough valuation of General Maritime's capital structure, industry fundamentals and financing needs, our Board determined that the $200 million Oaktree investment provides distinct benefits for the company.

First, the Oaktree financing enables the company to conserve cash for several years, since it doesn't amortize and accrues paying time interest through maturity at the company's option. Second, the Oaktree financing matures outside the company's current debt, including its senior notes. And third, the Oaktree financing enabled the company to pay down $115.8 million of debt on its 2005 revolving credit facility and $25 million on its 2010 credit facility. Additionally, we are pleased to have completion -- completed the syndication of an amended and extended $550 million revolving credit facility, which was led by Nordea Bank Finland plc, DnB NOR and HSH Nordbank AG.

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