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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3224  
Subject: NM Q3 Date: 11/20/2012 9:00 PM
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- Restructuring of Credit Default Insurance: This is probably most significant for the
charters on the Cape vessels. NM gets a big lump sum payment, but their risk profile does
increase pretty significantly.

http://www.navios.com/InvestorRelations/default.asp

NM used to provide a slide presentation with their quarterly results. Those are a lot easier to
follow.
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Author: blesto Big red star, 1000 posts Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2771 of 3224
Subject: Re: NM Q3 Date: 11/20/2012 11:01 PM
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NM gets a big lump sum payment, but their risk profile does
increase pretty significantly.


How does that raise their risk profile?

I could barely understand anything that Angeliki Frangou said on the conference call. I had the volume all the way up. It just sounded kinda garbled. Good thing they had a pdf presentation to follow.

I couldn't identify any red flags. Did you?
I won't really be worried about to much until I see that large debt maturity in 2017 get closer. Things seem to be progressing in a positve manner. Now if that BDI would rise some more...


Still long NM at 4% of my personal port.

blesto

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Author: Kisei Two stars, 250 posts Global Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2772 of 3224
Subject: Re: NM Q3 Date: 11/21/2012 7:56 AM
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LOL...I couldn't understand a word either! And then reading the Seeking Alpha transcript was like reading a grade 1 essay...none of the sentences made sense. I guess the writer couldnt understand Angeliki said either.

But reading through the presentation...yes looks all fine. The ships that the company used the pref shares to pay for seem really cheap now....

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Author: blesto Big red star, 1000 posts Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2773 of 3224
Subject: Re: NM Q3 Date: 11/21/2012 9:05 AM
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And I'd be more worried about those 9,880 open days in 2013 if it wasn't for the Cash received from insurance.

Mr.Frangou's english may not be so great, but he strikes me as intelligent and smart at what he does. Not to mention his optimistic attitude.

Kisei, is Special Ops looking at shippers like NM?


Foolish best,
blesto

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2774 of 3224
Subject: Re: NM Q3 Date: 11/21/2012 10:19 AM
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Actually, while reading the transcript, I also had some problems understanding Angeliki

--

How does that raise their risk profile?

The charter default insurance was providing NM nice continuation of revenue if a charter failed.
This is especially true given the price paid for some of the Capes, and the attached charters.
It will be interesting to see how much debt NM decides to pay down.

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2775 of 3224
Subject: Re: NM Q3 Date: 11/21/2012 10:26 AM
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Mr.Frangou's english may not be so great, but he strikes me as intelligent and smart at what he does. Not to mention his optimistic attitude.

MR. - really?? Are you referring to her father, who I understand was also in the shipping
business. Angeliki is a woman

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Author: blesto Big red star, 1000 posts Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2777 of 3224
Subject: Re: NM Q3 Date: 11/21/2012 10:57 AM
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My mistake. I'm hopeful she doesn't read the Fool msg boards. :-/

I've never seen a picture and she surely sounds like a man. Maybe they need better recording tech for those Conference Calls.
That still doesn't mean I'm not impressed with Ms.Frangou's intelligence and business smarts etc...


blesto,
Still long NM and feeling like I should apologize.

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2778 of 3224
Subject: Re: NM Q3 Date: 11/21/2012 12:09 PM
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http://www.google.com/imgres?imgurl=http://www.leadersmag.co...

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Author: blesto Big red star, 1000 posts Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2779 of 3224
Subject: Re: NM Q3 Date: 11/21/2012 4:00 PM
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Thanx.

I'm stupid is as stupid does sometimes.

You're not gonna let me live that down are you.

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2781 of 3224
Subject: Re: NM Q3 Date: 11/21/2012 5:09 PM
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You're not gonna let me live that down are you.

You said you'd never seen a picture of her, I was happy to oblige :)

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Author: Kisei Two stars, 250 posts Global Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2782 of 3224
Subject: Re: NM Q3 Date: 11/21/2012 9:50 PM
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blesto,

Special Ops unfortunately got burned with 2 shipping investments -- GMR (I think there was a misunderstanding of the deal that Oaktree had done with GMR ahead of this investment) and TEU. I dont know if they are considering any more at the moment. Ping me if you want some color.

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Author: blesto Big red star, 1000 posts Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2783 of 3224
Subject: Re: NM Q3 Date: 11/22/2012 5:28 AM
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Special Ops unfortunately got burned with 2 shipping investments -- GMR (I think there was a misunderstanding of the deal that Oaktree had done with GMR ahead of this investment) and TEU.

I don't think I'd touch GMRRQ. I'd rather invest in Oaktree directly.
As for Box Ships...They could be worth up to $15.00 per share IMHO.
Seems tempting at current prices and divi yield.

Markets closed today. On Friday I'm gonna open an ouperform CAPS position to help me keep track of TEU. I have a strange feeling they'll help to improve my CAPS score. ^_^

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Author: brewer12345 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2784 of 3224
Subject: Re: NM Q3 Date: 11/26/2012 11:40 AM
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The charter default insurance was providing NM nice continuation of revenue if a charter failed.
This is especially true given the price paid for some of the Capes, and the attached charters.
It will be interesting to see how much debt NM decides to pay down.

**************************

Basically NM monetized the insurance they had on the failed charters and got a lump sum (plus some continuing coverage), and the insurer will be exiting the business. Not being able to get coverage going forward will eventually matter, but at this point in the cycle it is a moot point. Why? Simply put, they no longer have anything ov value to insure. Look at where day rates are. They are low enough that a default would simply have NM recharter at a similar rate. Day rates cannot drop much because owners wills crap and park ships. If they could get long term charters at $40k/day, I would be worried. But when a 1 year deal for a cape is mid teens or lower, there isn't really much of value to bother insuring. When this will matter is when rates bounce in a serious way. But that could be a while.

NM already has said that thery are planning to pay down something like $25MM ion debt and keep the rest of the proceeds as cash. This is contongent on their banks agreeing, but they likely would not have said this to the market if the banks were not largely on board already. I expect the rest of the proceeds will be used for fleet expansion/renewal.

Since NM basically gained some value (arguably, and not much) on this deal, it doesn't really change the picture for them. They are in good shape through next year. After that, unless rates start to move up from where they are, things will begin getting tighter for NM. Now there are still a lot of levers they could pull to remain afloat, such as monetizing some of their NSALI stake, getting a rise in tanker rates (especially product tankers) helping out with their value of NNA, etc., but they will have to work harder to keep all their plates spinning starting in 2014 if we don't see day rates rise. This si no different than the situation when they had the insurance in place, so it does not make a whole lot of difference. The big difference is that now they have a pile of cash and they can capitalize on distressed asset price levels if they wish to do so.

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2785 of 3224
Subject: Re: NM Q3 Date: 11/26/2012 12:27 PM
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Basically NM monetized the insurance they had on the failed charters and got a lump sum (plus some
continuing coverage), and the insurer will be exiting the business. Not being able to get coverage
going forward will eventually matter, but at this point in the cycle it is a moot point. Why? Simply put,
they no longer have anything ov value to insure. Look at where day rates are. They are low enough that a
default would simply have NM recharter at a similar rate. Day rates cannot drop much because owners
wills crap and park ships. If they could get long term charters at $40k/day, I would be worried.
But when a 1 year deal for a cape is mid teens or lower, there isn't really much of value to bother
insuring. When this will matter is when rates bounce in a serious way. But that could be a while.


I was trying to figure out that continuing coverage part. From what I recall it is slightly
different from the charter default insurance that NM had prior. I noticed that the
number of Capes with healthy charters was down to 5, so I'm guessing a couple more had charters
default.

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Author: brewer12345 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2786 of 3224
Subject: Re: NM Q3 Date: 11/26/2012 12:48 PM
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I was trying to figure out that continuing coverage part. From what I recall it is slightly
different from the charter default insurance that NM had prior. I noticed that the
number of Capes with healthy charters was down to 5, so I'm guessing a couple more had charters
default.
***********************

Dunno if you have ever looked at asset backed or mortgage backed securities, but they have an analogous situation in their pool of charters. It has been long enough since the deals were inked and the market collapse happened that anyone who is likely to default has done so by now. The remaining performing charters are largely to good credits (investment grade), so the remaining insurance looks a lot like gilding the lilly, as far as I can tell.

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