Genco Shipping & Trading Limited (NYSE: GNK) closed the normal trading session on Friday at $16.76 up $0.74 or 4.62%. Genco stock traded 1.35 million shares during the session, which is higher than its average daily volume of 918.42K shares. Two new agreements boosted GNK stock price.
How did those agreements come about?
On worldwide shipping routes, Genco carries drybulk cargoes such as iron ore, coal, grain, steel products, etc. GNK specializes in capesize bulk vessels, with the other bulk vessel classes, including ultramaxes and supramaxes, representing our minor bulk vessel categories. The bulk vessel fleet at GNK includes main vessels for iron ore and coal transport, but smaller vessels for grains and steel products, as well as cargoes such as fertilizers, bauxite, nickel ore, salt, and sugar.
Genco said it had agreed to purchase two 61,000-dwt Ultramax vessels that are scheduled for delivery in 2022.
- Those vessels are to be constructed at Dalian Cosco KHI Ship Engineering Co. Ltd. (DACKS).
- GNK expects to receive the vessels in January 2022.
- This is GNK’s fifth and sixth high specification, fuel-efficient Ultramax vessel purchase since December 2020.
- In addition, GNK will have doubled its Ultramax presence during that time.
- As a result of the acquisition, GNK intends to fund the acquisition from cash on its balance sheet.
- As part of its portfolio approach to fixture activity, GNK announced that it has fixed two additional vessels for a period time charter based on the strong market:
- At a per day rate of $32,000, Baltic Bear, a 2010-built Capesize, has been fixed for 10 to 14 months
- GNK fixed a 2015-built Ultramax, Genco Vigilant at $17,750 per day for 11 to 13 months beginning in October 2021
Are the acquisitions going to help GNK?
While advancing the age profile of GNK’s asset base with these vessels, GNK continues its growth trajectory within the key Ultramax sector. Moreover, Genco (GNK) can further lower its financial leverage and cash-flow breakeven rate as a result of acquiring these vessels without taking on excessive debt.