Chairman's Commentary

I spent last weekend in Greensburg, Kansas. Not on business. Not on pleasure. Just saying “Thank You”.

On the 7th anniversary of the tragedy of September 11th 2001, New York has a lot to be thankful for. More importantly New Yorkers have a lot to be thankful for.

Seven years ago America and the world reached out to us in our moment of tragedy and helped soothe our deep and violent wounds and now we can respond and give back and say “Thank You”.

An organization that has deeply affected me is the New York Says Thank You Foundation. (www.newyorksaysthankyou.org). The Foundation takes volunteers – and most especially firefighters and first responders to areas of the country hit by natural disaster and helps them in their rebuilding.

In May 2007, Greensburg, Kansas a small prairie town of some 1,300 people was devastated by a terrifying tornado. In seven minutes a lifetime of memories and work were wiped out. Several hundred volunteers descended on the town (including some 150 firemen from New York and other communities around the country) and worked on raising a new barn on the county fair grounds. Work finished we marched on Sunday to a moving service of thanksgiving. I attended with my twelve-year old son. It was an emotional event and clearly some 500 people in the hastily rebuilt high school gym bore many scars. It was indeed a place full of tears.

We live and work in the greatest city in the world. NYMAR is proud to champion our city, our skills, our industry but the greatest asset in this town is our people not just in the maritime sector but throughout the city.

Wear your NYMAR pin (and if you don’t have one just ask us and we will get you one!) with pride and thank a fireman, a policeman an emergency worker next time you see them.

We are “the Capital for Shipping” but we are a whole lot more.

 Where in the world is NYMAR?

This month, we are offering a bottle of champagne to the first person who guesses correctly where in the world our NYMAR member took this photo!

NYMAR’s reach is far and wide. Each month, we will feature our signature hat in yet another unforgettable location as testimony that NYMAR is everywhere! Please contribute your photos of where your NYMAR hat has taken you recently!

NYMAR editor, Ranjeeta D McGroarty catches up with Chris Teryazos, Partner at New York based Green Maritime Partners, shipping’s first ‘Green Fund’.

Ranjeeta:	Who masterminded the ‘Green’ Fund idea and what was the motivation behind it?
Chris:	Green Maritime Partners (GMP) was started in partnership between Peter C. Georgiopoulos and myself.  Our intention was to capitalize on the growing demand for clean energy and the increasing pressure on the maritime industry to reduce its environmental footprint.  Of course as opportunistic investors we will look outside that mandate at more traditional energy and maritime investments as well.
Ranjeeta:	GMP appears to be the first fund of its kind. What type of projects exactly will you be looking at? Please explain in detail.
Chris:	As opportunistic investors I would not rule anything out.   On the energy side we are seeing a number of businesses in the renewable and alternative energy space of energy generating assets.  This would include everything from solar, wind, biomass, hydro etc...  In addition, we will also look at suppliers to these industries that may enjoy the same growth dynamics as the power producers themselves. Separately, we are seeing some more traditional energy projects that have become viable at today’s prices.  The same mantra holds true on the maritime side. We are looking at businesses that can help increase energy efficiency and lower the overall environmental impact of the shipping industry. That includes everything from port reception facilities, lighting systems, technologies that enhance energy efficiency etc...
Ranjeeta:	What does your typical day look like and the most exciting part of your job?
Chris:	There really is no typical day.  It depends entirely on what we are working on and at what stage we’re in on a given investment.  The most exciting part of my job is having the opportunity to review new business plans and discuss which ones are best positioned for success.
Ranjeeta:	In an investment, very often private equity funds end up managing a company. What do you think are the advantages and disadvantages to that?
Chris:	I think one of the principal determinants of a potential investment is the quality of their management team.  That said if there is a compelling business we can usually find the right people to run it.
Ranjeeta:	Is there a geographical area you are focusing?
Chris:	Obviously investing in the U.S. has its advantages but we invest on a global basis as long as we get comfortable with the risks involved.
Ranjeeta:	While scouting a potential investment, how do you eliminate risk factors?
Chris:	We look for the same fundamental elements in all of our investments.  Strong management, a clear value proposition and a highly visible pathway to cash flows.
Ranjeeta:	How do you set a time frame and potential exit strategy for GMP?
Chris:	There is no cookie cutter answer. I think we look at all the alternatives available to us and pursue the most attractive option at the time.  Depending on the situation we will look at investments with a view to holding them for a three to five year time horizon.  That may include a strategic sale, a sale to a financial buyer or a public listing. We are patient investors so in certain situations may be willing to hold on to them for a longer period.
Ranjeeta:	What type of approximate returns are you looking to achieve? Any particular financial ratios you consider the most important in your investment evaluation?
Chris:	This really depends on the risk profile of the investment.  Certainly somewhere north of 25%. We like to value businesses relative to their cash flow generation.  If the business is pre-cash flow we will look at the potential payback period once it reaches a cash flow positive stage.
Ranjeeta:	Negotiating, structuring and closing deals, plays an active part in the deal making process. What do you think is the toughest part of the job?
Chris:	The most challenging part of the job is finding solutions that align the interests of everyone involved.  To do this you really need to understand the motivations of everyone you are involved with.  It’s easier said than done.
Ranjeeta:	Can you tell us a little bit about yourself, background etc.?
Chris:	I am originally from Montreal, Canada and have lived in New York for almost 10 years now.  I have been in finance my entire career and have focused on private equity investing for the greater part of it.  My family has had a history in the shipping industry but for the most part that was before my time.  That said it’s a fun business to be involved in and I have always been interested by it.
Ranjeeta:	How do you see GMP five years from now?
Chris:	We’ll be doing exactly what we’re doing now.  Investing in great businesses and supporting management teams in reaching their potential.

Dahlman Rose Indices

Monthly News

Minimal damage on Gulf Coast ports and refineries following Ike

The Port of Houston (PHA), the nation’s second largest, was without power but expects to reopen September 15 if power is restored and the Coast Guard found no obstacles in the shipping lanes except for some empty cargo containers blowing around. “Based on preliminary assessments, the PHA facilities have limited negative impact from Hurricane Ike. As is most of the Houston area, we are without electricity and we are operating with limited temporary power from generators,” port authorities said. Initial assessments of the PHA terminals revealed minimal wind damage that knocked down a few fences, containers, and electrical lines.

The center of the storm appeared to miss the vital concentration of oil and petrochemical refineries in the Houston area, and the surge of water rolling into the port was also weaker than predicted. The storm surge was smaller than forecast and the greatest surge, of 15 feet, happened at Sabine Pass, near the Texas-Louisiana line. Authorities had predicted surges of 20 to 25 feet.

Refineries include that of Royal Dutch Shell, BP, Valero, Marathon, ConocoPhillips and ExxonMobil. Shell Oil said crews would fly over oil-rigs in the Gulf of Mexico shortly to assess damage. The U.S subsidiary of Royal Dutch Shell said it could take weeks before full production could resume at its facilities. Valero Energy Corp. said crews would soon get in to inspect refineries in Houston and Texas City, which remained shut down.
The eight shut refineries in the Houston area alone account for 22.2 million barrels a day, or 13 percent of the total US refining capacity, industry analysts said.

Meanwhile, gas prices soared across the country amid fears the storm would disrupt fuel supplies. Ike hit a region that is home to about 25 percent of the United States’ oil refining capacity, and the storm’s progress across the Gulf of Mexico shut down crude oil collection from Gulf oil fields.

Great Circle in Caspian deal

Connecticut based private equity firm Great Circle Capital (GCC), has invested $15m in Caspian Services, Inc. (OTC Bulletin Board: “CSSV.OB”), an offshore vessel operator and seismic player. Proceeds from the convertible loan offering are earmarked for the development of its marine supply base located at Bautino Bay on the Caspian Sea and for general corporate purposes promoting other growth initiatives, including expansion of the company’s onshore and offshore seismic capabilities. As part of the investment, Stamford based Great Circle will be offered a seat on the company’s Board of Directors.

“The Kazakhstan off shore oil sector holds one of the largest undeveloped proven oil reserves in the world. Caspian Services specializes in areas crucial to E&P activity in the region,” said Paul Rapello, Partner at Great Circle Capital. “The company is already the dominant local seismic and support provider to the oil and gas industry and our investment strengthens the Company’s ability to meet the growing demand for its services,” he added.

The Great Circle investment brings the total capital raised by Caspian Services in the last year to over $35m, demonstrating the strong institutional investor interest in the Company. In fiscal 2007, Caspian Services reported record revenues and EBITDA of $64.9m and $21m, respectively.

“We are pleased to conclude Great Circle’s investment. The potential in the Caspian region is vast, and funding expansion to keep up with demand remains one of our biggest challenges,” said Laird Garrard, CEO of Caspian Services. According to the company, Great Circle’s cash infusion and their participation on Caspian’s Board will help it implement its growth plans more aggressively.

The Great Circle Fund is a $190m emerging markets private equity fund focused on investing in the transportation and infrastructure sector. The Fund’s primary geographic focus is the countries of the former Soviet Union, Southeast Europe and Turkey.

Heavy-lifting for TBS

NYMAR member, Joseph Royces, Chief Executive of TBS International has ventured into the heavylift realm by agreeing to acquire multipurpose tweendecker vessel, the MV CEC Cardigan. The vessel, which will be renamed MV Zia Belle is a 1997 built 8,874dwt heavy-lift multipurpose tweendecker with two 150-ton cranes, combinable up to 300 tons. “We are excited to announce the acquisition of the MV Zia Belle, our first heavy-lift tweendecker, which solidifies TBS’s operational capabilities in project cargoes and complements our multipurpose tweendecker fleet,” said Joseph Royce, chairman, CEO and president of TBS International.

The Nasdaq-listed company will acquire this vessel charter-free for $20.6m with expected delivery during the fourth quarter of 2008. The Zia Belle is claimed to be TBS’s first tweendecker with heavy-lift gear.

Following this purchase, TBS’s fleet will be comprised of 47 vessels with an aggregate of 1.4 million dwt, consisting of 24 multipurpose tweendeckers and 23 handysize/handymax bulk carriers. In addition, TBS has six Roymar class 34,000dwt multipurpose vessels with retractable tweendecks on order with Chinese shipyards, of which two are scheduled for delivery in 2009 and four in 2010.

Seacor Buyback

New York Stock Exchange listed, Seacor Holdings Inc. (NYSE: CKH) just announced that its Board of Directors has increased its authorization for share buybacks and its 2.875% convertible senior debentures due 2024 by $117.7m for a total of up to $150m.

Separately, Seacor may buy any or all of its 7.2% senior notes due 2009, its 5 7/8% senior notes due 2012, and the 9 1/2% senior notes due 2013 of Seabulk International, a wholly-owned subsidiary. The company said it will buyback securities from time to time through open market purchases, privately negotiated transactions or otherwise depending on market conditions.

Following the announcement, Seacor’s share price increased by 2.9% to $84.49 in the morning trading hours. Seacor is a provider of marine support and transportation service, primarily to the energy and chemical industries.

1,000 Days Non-Stop At Sea

Reid Stowe completed 500 of his 1000days Non-Stop at Sea on Thursday September 4th, 2008 and NYMAR editor Ranjeeta McGroarty was invited to celebrate the occasion at New York’s Pier 66. “On his return to New York in 2010, he will have spent nearly three years without stopping or resupplying, surpassing the current continuous solo sailing record of 657 days held by the Australian Jon Sanders,” Donna Stein, Reid Stowe’s close friend told NYMAR. Stowe set out on his expedition on The Schooner Anne, named after Stowe’s mother, built in 1978 by the family in the style of a nineteenth-century Gloucester fishing schooner.

Stowe sees the 1000 Days Non-Stop at Sea project as a space analogous expedition because the voyage involves the same length of time as a round trip to Mars and poses similar human psychological endurance issues.  He published an article in 1990 entitled “Seafarers of today provide a role model for spacefarers of tomorrow.”

In the first 500 days, the boat has encountered numerous challenges, including a collision with a freighter in the Atlantic on Day 15which resulted in the loss of its bowsprit.  “Reid also suffered a desalinator failure in the Southwest Pacific, which threatened his ability to get fresh water and briefly lost the use of his power winch, which is perhaps his most important tool for sailing his 70-foot, 2-masted, 50-ton schooner alone,” Joe Barello 1000days organizer and Stowe’s friend told NYMAR. “The past few weeks, he paused along the Equator to finish sail and mechanical repairs and gather enough rainwater to fill his tanks to prepare for a passage around Cape Horn and the completion of the Anne’s first circumnavigation,” Mr Barello informed.

While docked in New York over a period of several years, Stowe, along with numerous sponsors and friends refurbished and refitted the schooner for the 1,000 days voyage. The schooner contains three years of food and supplies and provides its own energy from sun and sea for lights, winch and satellite communications through the use of solar panels and water generators driven by the forward motion of the boat.

The Anne has proved her seaworthiness for over 27years throughout the world’s oceans: in Antarctica (1987); on the 100 day out-of-sight of land North Atlantic (1994); on the 200 day Odyssey of the Sea Turtle (1996); and on the Voyage of the Argonauts (1998), where she survived a knockdown by a 60-foot rogue wave. 

Oceanaut’s quartet

Blank-cheque company, Oceanaut’s (AMEX: OKN) shareholders will vote 15 October on a $352m bulker deal that would change the company from special purpose acquisition company (SPAC) to an operating bulker owner. Recently, the American-Exchange listed company announced that it has agreed to buy four bulkers with reports indicating that the vessels are owned by Greece’s Irika Shipping. The transaction will be financed by the cash held in Oceanaut’s trust account combined with the takings from an already secured loan facility and preferred equity to be allocated to Excel Maritime Carriers which initiated Oceanaut in March 2007 and owns 20% of the company.

In order to secure shareholder approval for the bulkers, the company has amended its SEC filing (Securities and Exchange Commission) to permit an extra month until 31 December. Based on the fixed time charters and expected operating costs for the initial fleet, Oceanaut anticipates generating revenue of approximately $69.7m and EBITDA of approximately $60.6m for the full year 2009. Oceanaut intends to pay quarterly dividends, beginning with an initial base dividend of $0.28 per share payable for the fourth quarter of 2008. This implies a 13.6% yield based on Oceanaut’s estimated cash held in trust of $8.25 per share as of September 30, 2008.

In addition, Oceanaut’s sponsors have agreed to convert 5.6 million shares into non-cumulative subordinated shares, which will not be entitled to receive dividends until the second quarter of 2010. Thereafter, dividends will be paid on subordinated shares provided that common shareholders have received full payment of all base dividends. Oceanaut’s management believes there is favorable business potential in the long-term charter market, particularly for dry bulk vessels. Nonetheless, the company has indicated cautiousness following weak financial markets and falling stock prices.

Demand for trained merchant mariners

Only months after graduation ceremonies were held on campuses across the nation, approximately 85 percent of 2008 graduates with merchant marine licenses from the United States Merchant Marine Academy and six state maritime academies have found employment afloat in the maritime industry or in the U.S military, according to data released by the Maritime Administration recently.

“This data indicates that the job market for merchant marine officers remains robust.  There is a growing, worldwide demand for fully-trained merchant marine officers and licensed mariners. Excellent training combined with ongoing global trade expansion will continue to make the graduates of U.S maritime colleges among the most qualified and employable mariners in the world,” said U.S Maritime Administrator Sean T. Connaughton.

Total employment for 2008 licensed graduates is already more than 95 percent.  This number includes those who have found shoreside employment in the maritime industry.  One of the academies, Great Lakes in Traverse City, Michigan, has placed 100 percent of its 2008 graduates in maritime afloat employment.

The Maritime Administration operates the U.S Merchant Marine Academy and provides funding and training ships to Maine, Massachusetts, Texas, California, Great Lakes Maritime Academies, and the State University of New York Maritime College.  The U.S Merchant Marine Academy is a federal service academy, and the state maritime academies are all part of their respective state higher education systems.

Heidenreich’s new software

Fritz Heidenreich, formerly running Heidmar’s technology arm recently set up Connecticut based internet-technology company, Heidenreich Innovations. Mr Heidenreich, the son of Per Heidenreich, former Heidmar owner bought two software applications from Oslo based Milbros Software involving chemical cargoes and stowage planning within weeks after he launched the company. The deal price was undisclosed.

The purchase was a database called MCIS2007, which has details on more than 10,000 chemical cargoes and MASS deals with stowage. Reports indicate that Mr Heidenreich believes both offer synergies with his Q88.com vessel-questionnaire system. Heidenreich Innovations has developed several software applications that ship owners rely on to conduct their business and currently has over 100 shipping companies using our applications.

Milbros employees will stay in Oslo but switch to Heidenreich. Milbros president Alan R Milligan will remain as a Heidenreich consultant. Per Heidenreich’s Heidmar was acquired by Morgan Stanley two years ago.

OSG appoints head of Gas Unit

New York headquartered Overseas Shipholding Group, (NYSE: OSG), just announced the appointment of Marc La Monte, 44, to lead its Gas Strategic Business Unit. Mr La Monte replacing Angus Campbell, will oversee the unit’s liquefied natural gas (LNG) carrier fleet, the development of OSG’s compressed natural gas (CNG) business and expand into the liquefied petroleum gas (LPG) market. Meanwhile, Mr Campbell will focus exclusively on developing CNG opportunities and continue to represent OSG in its important joint venture relationship with TransCanada CNG Technologies Ltd.

Morten Arntzen, OSG President and CEO said, “Marc’s broad commercial experience will serve us well as we continue to invest in our global gas segment, a strategic component of OSG’s portfolio of businesses. By having Angus Campbell focus exclusively on CNG, we enhance our chances of bringing this emerging clean technology to the market.”

A 23year industry veteran, Mr La Monte, who will report directly to Mr Arntzen, began his professional career at Mobil Oil Corporation followed by Mitsui and Co. (USA) and held various positions including both physical and paper trading of crude oil and petroleum products. OSG, a Dow Jones Transportation Index company is one of the largest publicly traded tanker companies in the world.

Crowley Maritime CEO gets Mystic Seaport award

Thomas B. Crowley Jr., chairman, president and CEO of Crowley Maritime Corp., will be honored October 29 with Mystic Seaport’s third annual America and the Sea Award in New York City. The award, which will be presented during a dinner at the Rainbow Room, recognizes an individual or organization whose contributions to the history, arts or sciences of the sea best exemplify the American spirit and character.

Mr Crowley became CEO of the family business in 1994 at the age of 27. Under his leadership, annual revenues have surpassed $1.5bn, and the company today is one of the largest U.S flag shipping companies, the leading container shipping line in Latin America and the Caribbean Basin, and the world’s largest tug and barge operator.

In 2002, Crowley established the Crowley Maritime Corp. Scholarship and the Crowley Maritime Corp. Summer Internship, both of which help students attending the Williams-Mystic program at Mystic (Connecticut.) Seaport who display excellent academic performance and financial need.

Massachusetts Maritime Academy Launches Free Online Education Program

Massachusetts Maritime Academy (MMA) was recently awarded a grant from the National Fish and Wildlife Foundation’s “Seafarer’s Environmental Education Fund” to develop and launch the Academy’s first online courses. The grant allows the program to initially be offered ‘free’ to students, representing a savings of over $3000 for each student when compared with a traditional 15-credit course cost. “Massachusetts Maritime Academy has always taken the lead in promoting new technologies on its campus. This program is one more example of how our Academy adheres strongly to its time-honored traditions while also embracing change,” Academy president RADM Richard G. Gurnon said.

The Academy’s Department of Marine Safety and Environmental Protection will oversee this online certificate program, called Pollution Compliance for Seafarers, which was approved by the Massachusetts Department of Higher Education and reviewed by the U.S Coast Guard. To earn the certificate, students will complete a sequence of five, three-credit courses designed to raise environmental awareness within the maritime industry both at sea and ashore.

MMA is collaborating with the Seamen’s Church Institute (SCI) of New York to reach a broader sector of the maritime industry. These brochures for mariners on marine pollution and compliance will be distributed by SCI’s port chaplains during brief presentations to foreign seafarers visiting U.S ports. For more information about the online certificate program, visit www.maritime.edu/seafarers or send an e-mail to seafarers@maritime.edu.

Financial Performance Charts

Shipping Company Performance Chart (NYSE)
(source: NYSE)

Shipping Company Performance Chart (NASDAQ OMX)
(source: NASDAQ OMX)

Transportation Index Charts
(source: NASDAQ Market Intelligence Desk)

Taste of NYC | Upcoming Events and Entertainment

NYC Websites

• www.nycvisit.com
• www.zagats.com
• http://www.ny.com/nightlife/
• http://www.ny.com/museums/
• http://www.allny.com/antiques/auctioneers.htm
• http://www.nytix.com
• http://www.majorleagueevents.com
• http://goingcoastal.wordpress.com

• The New York City Waterfalls - Artist Olafur Eliasson | Four sites including: the Brooklyn Bridge, between Piers 4 and 5, Pier 35, and Governors Island | 212-980-4575, through Oct 15
• Bryant Park Movie - Piano in the Park | Russ Kassoff, Sept 22 –Sept 26, Upper Terrace between 12:00pm – 1:45pm. Kassoff toured as pianist to Frank Sinatra and Liza Minnelli (www.bryantpark.org)
• Guggenheim Museum - Catherine Opie  | American Photographer, Sept 26-Jan 7, 2009 (www.guggenheim.org)
• MOMA - The Yoshiko and Akio Morita Gallery | Looking at Music, through Dec 31; Kirchner and the Berlin Street, through Nov 10 (www.moma.org)
• Metropolitan Museum -J. M. W. Turner, through September 21; Jeff Koons on the Roof, through Oct 26; Photography on Photography: Reflections on the Medium since 1960, through Oct 19 (http://www.metmuseum.org)
• Christies - New York, Rockefeller Center. Viewing and Auction | Asian Art Week, Sept 15-18 | Masterpieces from the Zimmerman Family Collection [Sale 2026], Sept 15, 10am-5pm; Indian and Southeast Asian Art [Sale 2024] Sept 16, 2pm; South Asian Modern + Contemporary Art [Sale 2025] Sept 16, 10am (www.christies.com)
• NYMAR Restaurant of the Month - Le Bernardin | www.le-bernardin.com (Chef, Eric Ripert’s French creation is the best in the city)
• September 2008 Street Fair Schedule - Friday, Sept 19 | Fulton Street Follies on Fulton Street from Water - Cliff St; Saturday, Sept 20 | Guardian Angels Fair
  on 7th Avenue from 47th - 57th Street; Sunday, Sept 21 | Eighth Avenue Fall Festival on 8th Avenue from 42nd - 57th St

New York State Travel & Tourism

To speak with a travel counselor, call during regular business hours (Eastern Standward Time) at 800/CALL-NYS (U.S., territories, possessions and Canada) or 518/474-4116 (all other areas). http://www.iloveny.com/home.aspx

New York City Travel & Tourism (NY City & Company)
212-484-1222

NYC 311 - City of New York directory assistance covering events, attractions and other citywide information

• Dial 311 in Manhattan (NYC), Staten Island, Bronx, Queens and Long Island.
• Dial 212-639-9675 outside of Manhattan (NYC), Staten Island, Bronx, Queens and Long Island. This is a toll call.