Standard & Poor’s takes General Maritime off CreditWatch

Standard & PoorÆs takes General Maritime off CreditWatch    Standard & Poor's Ratings Services, based in New York, has announced that it has affirmed its 'BB' corporate credit rating and its other ratings on General Maritime Corp. an ocean tanker owner and operator, and removed all of General Maritime's ratings from Standard & Poor's CreditWatch, where they were placed on March 26, 2004.
   General Maritime's ratings were placed on CreditWatch after General Maritime announced that it had agreed to purchase unrated Soponata S.A., a Portuguese operator of medium-size oil tankers, for $247 million, plus the assumption of $168 million of future vessel commitments.
   'The rating outlook is now stable,' Standard & Poor's Ratings Services said in a statement. New York-based General Maritime 'will have $766 million of lease-adjusted debt, with debt to capital of 52 percent,' the ratings services explained.
   'General Maritime should be able to reduce its acquisition-related debt, given the current strong tanker market, restoring related credit measures,' said Standard & Poor's credit analyst Kenneth Farer.
   'However, significant improvements are unlikely, as other debt-financed acquisitions are expected,' Farer explained.
   After all the Soponata vessels are integrated into General Maritime's fleet, General Maritime will operate 47 ocean-going vessels, 26 Aframax tankers and 21 Suezmax vessels, with four vessels on order. 'The company's fleet size is substantial, and its fleet is approximately the save average age as the global fleet. General Maritime has expanded mainly through acquiring vessels, rather than ordering new ships. Because of management's aggressive growth strategy, forecasts of the fleet size and balance sheet are subject to more-than-usual uncertainty,' Standard & Poor's Ratings Services said in a statement.
   'We expect tanker rates to remain above average in 2004, with continued premiums paid for double-hulled tankers because of heightened environmental concerns and the acceleration of the phase-out of single-hull vessels carrying heavy grades of oil,' Farer explained.
   As a result of new phase-out rules promulgated by the International Maritime Organization (IMO), Standard & Poor's said that General Maritime took an $18.8 million non-cash charge in the fourth quarter of 2003 for five of its nine single-hull vessels, and will increase its depreciation expense by $2.1 million per quarter through 2009. However, the new regulations are not expected to materially affect General Maritime over the immediate term, since all of its non-doubled-hulled tankers are allowed to continue operating through 2010.