By John Helmer in Moscow
The Far Eastern Shipping Company (Fesco), owned by Sergei Generalov, is likely to run a loss of at least $72 million this year, before foreign exchange losses and writedowns are counted, according to a new report on the company issued today by Moscow investment bank, Renaissance Capital. With total debt of $915 million — $215 million to be repaid before December 31 — RenCap analyst Alexander Kazbegi forecasts that Fesco’s liner business will see revenues fall by 36% on last year; the port division’s revenues will drop by 70%; and the rail division’s revenues will fall by 36%.
In reaction, Kazbegi reports Fesco as telling him the company intends to sell as many vessels as it can “while there is still a market for them despite prices being currently some 50% lower than in 1H08”. It has cancelled a plan for $100 million in newbuild orders, and is delaying delivery of four newbuild contracts from 2010 to 2011. According to Kazbegi, Fesco intends to delay, and in time possibly cancel commitments to build a new container terminal at Ust-Luga, and buy the 50% stake it doesn’t own in the Vladivostok Sea Port and Vladivostok Container Terminal.
The Rencap report also reveals that the dwindling value of Fesco’s fleet may breach loan covenants and trigger fresh problems with banks.