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Paragon trims hire on two vessels as fleet coverage is extended

ATHENS-based dry bulk owner Paragon Shipping has cut a deal with charterer Korea Line to reduce hire on its three-year-old panamax Pearl Seas from $51,300 to $37,300 daily. The agreement is one of a number of deals the company has unveiled that overall boost the Nasdaq-listed company’s fleet employment while maintaining what chief executive Michael Bodouroglou called “solid free cash flow” for Paragon. Korea Line will pay the reduced rate for the Pearl Seas for the balance of the existing three-year charter, ending in August 2011, and has signed up to a further 26-28 months at the owner’s option with hire reset at $32,500 per day. In other developments, Paragon has granted Cosco Bulk a degree of relief on hire payments for one of its handymaxes. Until the end of this year the Chinese giant will save $10,000 per day on hire for the 1995-built Crystal Seas but from January 1, 2010 hire will revert to the original $33,000 per day until the end of the charter period in the second half of 2011. At the same time Cosco Bulk has agreed to take another Paragon handymax, Clean Seas, for a further year after expiry of the current contract in January 2011, with the additional period priced at $17,250 per day, compared with the current rate of $9,000 per day. Paragon has also signed a new deal with Morgan Stanley for the 10-year-old panamax Deep Seas, which is on charter to the US financial group at $34,250 per day. Following expiry of the present charter in September this year the ship will continue with Morgan Stanley until late 2011 but at a lower rate of $15,000 per day. Mr Bodouroglou said he was pleased with the outcome of negotiations and portrayed the deals as strengthening business relationships with major charterers. The overall outcome was to lift total contracted gross income from the fleet by about $28m to an estimated $300m. “These new charter arrangements will increase our fixed revenue days in 2010 and 2011 from 55% and 38% to 72% and 49% respectively at rates that continue to provide for solid free cash flow,” Mr Bodouroglou said. Paragon owns and operates a fleet of 12 bulkers, comprising seven panamaxes, two supramaxes and three handymaxes.

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