Paragon Expects Stronger Drybulk Market

During the fourth quarter of 2013, Paragon saw a significant improvement in the time charter market, which boosted the companys revenues year over year and helped improve its EBITDA and earnings on an adjusted basis.
Commenting on the results, Michael Bodouroglou, Chairman and Chief Executive Officer of Paragon Shipping, stated, “In 2013, we capitalized on the foundation we set at the end of 2012 and continued to execute on our growth strategy. During 2013, we increased and modernized our fleet with the delivery of one Handysize drybulk vessel, the M/V Priceless Seas, and the purchase of four new Eco-Design Ultramax newbuildings. We transitioned our fleet employment strategy away from medium and long-term time charters to the spot market and short-term contracts, in order to take advantage of the expected improvement in time charter rates in 2014.
We also secured financing for our newbuilding vessels that are expected to be delivered in 2014. So far, 2014 has continued to be rather active with respect to our fleet growth. In January 2014, we took delivery of our fourth Handysize drybulk vessel, the M/V Proud Seas. In addition, following the completion of our public offering of 6,785,000 common shares in February 2014, we signed shipbuilding contracts for Eco-Design Kamsarmax newbuildings that increased our current newbuilding program to eight vessels with scheduled deliveries between the second quarter of 2014 and the fourth quarter of 2015,” said Mr. Bodouroglou.
He concluded, “Our mission is to continue to position the Company for growth in order to take advantage of what we expect to be a stronger drybulk market in the coming years, which in turn should create additional value for our shareholders.”
Newbuilding Program Update
In December 2013, the company agreed to acquire shipbuilding contracts for two additional Ultramax newbuilding drybulk carriers. The Ultramax newbuildings are sister ships to the two Ultramax newbuildings the company previously acquired, have a carrying capacity of 63,500 dwt each and are currently under construction at Yangzhou Dayang Shipbuilding Co. Ltd., member of Sinopacific Shipbuilding Group, with scheduled deliveries in the second quarter of 2015. The total consideration for these two Ultramax newbuildings amounted to $56.5 million.
Paragon also entered into an agreement with Zhejiang Ouhua Shipbuilding, a Chinese shipyard, to cancel one of its two 4,800 TEU containership newbuilding contracts at no cost to the company, to transfer the deposit to the remaining vessel and to reduce its contract price from the original $57.5 million to $55.0 million.
The balance of the contract price is due upon the delivery of the vessel in the second quarter of 2014 and is expected to be financed through the loan facility with China Development Bank (CDB), subject to certain closing conditions. The company is currently in discussions with CDB to amend the terms of the credit facility to reflect the cancellation of one of its two 4,800 TEU containership newbuilding contracts.
In March 2014, Paragon signed shipbuilding contracts for three Kamsarmax newbuilding drybulk carriers. These Eco-Design Kamsarmax newbuildings have a carrying capacity of 81,800 dwt each and will be built at Jiangsu Yangzijiang Shipbuilding Co.
Two of the newbuildings are scheduled to be delivered in the second quarter of 2015 and one is scheduled to be delivered in the fourth quarter of 2015. The total consideration for these three newbuilding contracts is $91.7 million.
Q413 PRGN Earnings Release.pdf
 

March 14, 2014