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CPLP - A Deep Fundamental Analysis

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April 24, 2011 – Comments (1) | RELATED TICKERS: CPLP

Market conditions and their impact on the company's liquidity raise substantial doubt about CPLP ability to continue paying dividends

 

Fleet / Charters & Declining Fundamentals

An over-supply of tanker vessel capacity has lead to reductions in charter hire rates, vessel values and profitability.

Excerpted from the CPLP 20F filing

 

The market supply of tankers is affected by a number of factors such as demand for energy resources, oil and petroleum products, level of charter hire rates, as well as strong overall economic growth in parts of the world economy, including Asia, and has been increasing as a result of the delivery of substantial new building orders over the last few years.  New-buildings were delivered in significant numbers starting at the beginning of 2006 and continued to be delivered in significant numbers through to 2010 and 2011.  In addition, it is estimated by Clarkson Research Services Limited, Shipping Intelligence Weekly that the new-building order book, which extends to 2014, equaled approximately 28% of the existing world tanker fleet and the order book may increase further in proportion to the existing fleet.  If the capacity of new ships delivered exceeds the capacity of tankers being scrapped and lost, tanker capacity will increase. If the supply of tanker capacity increases and if the demand for tanker capacity does not increase correspondingly, charter rates and asset values could materially decline.  If such a reduction occurs, we may only be able to recharter our vessels at reduced or unprofitable rates as their current charters expire, or we may not be able to charter these vessels at all.  A reduction in charter rates and the value of our vessels may have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to make cash distributions.

Deferred Amortization

Excerpted from 20 F page F 23

 ...  We will need a substantial portion of our cash flow to make interest payments and, following the end of the relevant non-amortizing periods, principal payments on our debt, reducing the funds that would otherwise be available for operations, future business opportunities and distributions to unitholders...
Bank loans repayment schedule..  
2012 = $18,325
2013 = $44,713
2014 = $47,400
Thereafter = $363,562
We may continue to draw down amounts under this facility until June 2012, at which date any amounts available for borrowing will automatically terminate and the outstanding amount will automatically convert into a five-year term loan.  In addition, the facility is non-amortizing until June 2012 and we will not be required to make any repayments of the principal amounts outstanding under the facility provided that we comply with the covenants and restrictive ratios set out in the facility and described below.  The final maturity date of this facility is June 2017...

 

Here's the rest of the article

1 Comments – Post Your Own

#1) On April 24, 2011 at 11:25 PM, ikkyu2 (99.22) wrote:

I don't know if I'd buy a stock whose ticker symbol was "Kerplop!"

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