General Maritime Corporation Announces Second Quarter and Six Months 2010 Financial Results

NEW YORK, July 28 /PRNewswire-FirstCall/ -- General Maritime Corporation (NYSE: GMR) today reported its financial results for the three and six months ended June 30, 2010.

Financial Review: Second Quarter 2010

The Company recorded a net loss of $14.3 million or $0.25 basic and $0.25 diluted loss per share for the three months ended June 30, 2010 compared to net income of $7.3 million or $0.13 basic and $0.13 diluted earnings per share for the three months ended June 30, 2009. The decrease in net income was primarily the result of an 18.1% decrease in TCE to $22,633 per day for the three months ended June 30, 2010 compared to $27,649 per day for the prior year period, as well as an $11.2 million increase in net interest expense to $19.0 million for the three months ended June 30, 2010 compared to $7.8 million for the prior year period.

John Tavlarios, President of General Maritime Corporation, commented, "During the second quarter of 2010 and year-to-date, we entered into several important value-creating transactions, positioning the Company to grow its modern fleet, increase its earnings power and strengthen its balance sheet.  With our agreement to acquire seven double-hull tankers, we capitalized on attractive asset values and expect to expand our fleet by approximately 50% on a tonnage basis and further improve our age profile.  With a flexible deployment strategy, a diverse service offering and an increased presence in the favorable VLCC market, we have positioned the Company to take advantage of future tanker rate increases while achieving a level of stability in our results.  As we focus on integrating the newly acquired vessels into the Company, we will continue to concentrate on providing leading international charterers with service that meets the highest operational standards."  

Net voyage revenue, which is gross voyage revenues minus voyage expenses unique to a specific voyage (including port, canal and fuel costs), decreased 13.8% to $61.0 million for the three months ended June 30, 2010 compared to $70.8 million for the three months ended June 30, 2009.  This was primarily due to an increase in voyage expenses from $9.4 million for the three months ended June 30, 2009, to $30.4 million for the three months ended June 30, 2010.  This increase in voyage expenses were due to higher bunker costs as well as an increase in percentage of spot market operating days for the second quarter 2010, compared to the prior year period.  EBITDA for the three months ended June 30, 2010 decreased 27% to $27.0 million compared to $37.0 million for the prior year period (please see below for a reconciliation of EBITDA to net income). As of June 30, 2010 the Company's net debt (calculated as total long term debt less cash) was $842.6 million.

Total vessel operating expenses, which are direct vessel operating expenses and general and administrative expenses, increased 1.3% from $33.2 million for the three months ended June 30, 2009 to $33.7 million for the three months ended June 30, 2010.  Total vessel operating expenses is a measurement of the Company's total expenses associated with operating its vessels.  Daily direct vessel operating expenses increased by 2.9% to $8,602 for the quarter ended June 30, 2010 compared to $8,359 for the prior year period. This increase was primarily due to increased costs on the VLCC vessels as well as certain Handymax and Panamax vessels whose fixed fee contracts from the prior year period expired, subjecting them to higher current market costs.  Additionally, daily vessel operating expenses on certain vessels still on fixed fee contracts from the Arlington acquisition experienced annual contractual fee increases.

General and administrative costs decreased by 2.5% to $9.4 million for the quarter ended June 30, 2010 compared to $9.7 million for the prior year period.  Contributing to this reduction were a decrease in personnel costs in our New York office and in operating costs of our Portugal office resulting primarily from an appreciation of the U.S. Dollar against the Euro.  

Financial Review: First Half 2010

Net loss was $23.4 million or $0.41 basic and $0.41 diluted loss per share, for the six months ended June 30, 2010 compared to net income of $26.2 million, or $0.48 basic and $0.47 diluted earnings per share, for the six months ended June 30, 2009. Net voyage revenues decreased 17.4% to $126.9 million for the six months ended June 30, 2010 compared to $153.7 million for the six months ended June 30, 2009.  EBITDA decreased 31% to $59.1 million for the six months ended June 30, 2010 compared to $85.7 million for the six months ended June 30, 2009.  TCE rates obtained by the Company's fleet decreased 19.7% to $23,479 per day for the six months ended June 30, 2010 from $29,227 for the prior year period. Total vessel operating expenses decreased 0.4% to $67.7 million for the six months ended June 30, 2010 from $68.0 million for the prior year period, and daily direct vessel operating expenses increased 4.2% to $8,648 for the six month period ended June 30, 2010 from $8,299 from the prior year period.

Summary Consolidated Financial and Other Data

The following table summarizes General Maritime Corporation's selected consolidated financial and other data for the three and six months ended June 30, 2010 and 2009 as well as selected consolidated balance sheet data as of December 31, 2009.  Attached to this press release is an Appendix, which contains additional financial, operational and other data for the three and six months ended June 30, 2010 and 2009.

General Maritime Corporation's Fleet

As of July 28, 2010, General Maritime Corporation's fleet was comprised of 32 wholly owned tankers, consisting of 3 VLCC, 11 Suezmax, 12 Aframax, 2 Panamax, and 4 Products tankers, with a total carrying capacity of approximately 4.2 million deadweight tons, or dwt.  The average age of the Company's fleet as of June 30, 2010 by dwt was 10.1 years compared to 9.1 years as of June 30, 2009.  

As of July 28, 2010, General Maritime has 14 out of 32 vessels on time charters comprised of five Aframax, one Suezmax, two Panamax, four Handymax and two VLCC tankers.  There are options to extend charters on two of the vessels, and a profit sharing arrangement on two vessels during its option period.

The table below outlines our vessels which are on time charter as of July 28, 2010, their charter rates and the expiration dates for the charters.

The Company's primary area of operation is the Atlantic basin.  The Company also currently has vessels employed in the Black Sea and Far East to take advantage of market opportunities and to position vessels in anticipation of drydockings.

Metrostar Acquisition

On June 6, 2010, General Maritime Corporation announced it had agreed to acquire seven modern double hull tankers from subsidiaries of Metrostar Management Corporation. The fleet to be acquired consists of five VLCC tankers built between 2002 and 2010 and two Suezmax newbuilding tankers to be delivered in 2010 and 2011.  

On June 17, 2010, General Maritime Corporation announced it had priced 30.6 million shares in a follow-on offering with gross proceeds of $206.6 million.  The Company announced that it intends to use the net proceeds, from the offering, of approximately $195.6 million to finance a portion of the total purchase price for the announced vessel acquisitions. Additionally, the Company has entered into a senior secured credit facility Nordea Bank Finland plc and DnB NOR Bank ASA that the Company intends to use to finance 60% of the acquisition purchase price.

In the second quarter, the Company paid a 10% deposit in connection with the vessel acquisitions totaling $62 million.  As of July 28, 2010, the Company has taken delivery of one vessel, the Genmar Zeus, with the delivery occurring on July 2, 2010.  Of the remaining 6 vessels, 2 are scheduled for delivery in August 2010, 3 in Q4 2010 and 1 in April 2011.  

Q2 2010 Dividend Announcement

The Company announced that its Board of Directors has adopted a new dividend policy under which the Company intends to declare quarterly dividends with a target amount per share of $0.08 based on the current number of shares outstanding.  The declaration of dividends and their amount, if any, will depend upon the results of the Company and the determination of the Board of Directors.

The Company's Board of Directors declared a Q2 2010 quarterly dividend of $0.08 per share payable on or about September 3, 2010 to shareholders of record as of August 20, 2010. Including the Q2 2010 dividend, General Maritime has declared cumulative quarterly and special dividends of $21.95 per share.  

Jeff Pribor, Chief Financial Officer of General Maritime Corporation, commented, "During the second quarter of 2010 and year-to-date period, we continued to receive strong support from both leading shipping banks and the equity capital markets, enabling the Company to successfully finance our fleet expansion in a timely manner.  We are also pleased to have deleveraged the Company's balance sheet during a time when we significantly increased the size of our fleet.  We enter the second half of 2010 with considerable financial flexibility and remain committed to opportunistically implementing our long-term growth strategy as we continue to distribute quarterly dividends to shareholders."

About General Maritime Corporation

General Maritime Corporation is a leading crude and products tanker company serving principally within the Atlantic basin, which includes ports in the Caribbean, South and Central America, the United States, West Africa, the Mediterranean, Europe and the North Sea. General Maritime also currently operates tankers in other regions including the Black Sea and Far East. General Maritime owns a fully double-hull fleet of 32 tankers – three VLCC, twelve Aframax, eleven Suezmax tankers, two Panamax and four Product tankers - with a total carrying capacity of approximately 4.2 million dwt.

All per share amounts presented throughout this press release, unless otherwise noted, have been adjusted to reflect the exchange of 1.34 shares of the Company's common stock for each share of common stock held by shareholders of General Maritime Subsidiary Corporation (formerly known as General Maritime Corporation) in connection with the Arlington acquisition.

Conference Call Announcement

General Maritime Corporation announced that it will hold a conference call on Thursday, July 29, 2010 at 10:00 a.m. Eastern Daylight Savings Time to discuss its 2010 second quarter financial results.  To access the conference call, dial (913) 312-1480 and enter the passcode 6826494.  A replay of the conference call can also be accessed until August 12, 2010 by dialing (888) 203-1112 for U.S. callers and (719) 457-0820 for international callers, and entering the passcode 6826494. The conference call will also be simultaneously webcast and will be available on the Company's website, www.GeneralMaritimeCorp.com. The Company intends to place additional materials related to the earnings announcement, including a slide presentation, on its website prior to the conference call.

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations. Included among the factors that, in the Company's view, could cause actual results to differ materially from the forward looking statements contained in this press release are the following: loss or reduction in business from the Company's significant customers; the failure of the Company's significant customers to perform their obligations owed to us; changes in demand; a material decline in rates in the tanker market; changes in production of or demand for oil and petroleum products, generally or in particular regions; greater than anticipated levels of tanker newbuilding orders or lower than anticipated rates of tanker scrapping; changes in rules and regulations applicable to the tanker industry, including, without limitation, legislation adopted by international organizations such as the International Maritime Organization and the European Union or by individual countries; actions taken by regulatory authorities; actions by the courts, the U.S. Coast Guard, the U.S. Department of Justice or other governmental authorities and the results of the legal proceedings to which the Company or any of its vessels may be subject; changes in trading patterns significantly impacting overall tanker tonnage requirements; changes in the typical seasonal variations in tanker charter rates; changes in the cost of other modes of oil transportation; changes in oil transportation technology; increases in costs including without limitation: crew wages, insurance, provisions, repairs and maintenance; changes in general domestic and international political conditions; changes in the condition of the Company's vessels or applicable maintenance or regulatory standards (which may affect, among other things, the company's anticipated drydocking or maintenance and repair costs); changes in the itineraries of the Company's vessels; adverse changes in foreign currency exchange rates affecting the Company's expenses; the fulfillment of the closing conditions under, or the execution of customary additional documentation for, the Company's agreements to acquire vessels; sourcing, completion and funding of financing on acceptable terms; financial market conditions and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K for the year ended December 31, 2009 and its subsequent reports on Form 10-Q and Form 8-K. The Company's ability to pay dividends in any period will depend upon factors including applicable provisions of Marshall Islands law, restrictions under the Company's credit facilities and indenture governing the Company's Senior Notes and the final determination by the Board of Directors each quarter after its review of the Company's financial performance.  The timing and amount of dividends, if any, could also be affected by factors affecting cash flows, results of operations, required capital expenditures, or reserves.  As a result, the amount of dividends actually paid may vary.  The Company's dividend policy may be changed at any time by the Company's Board of Directors.