THE parade of second-quarter results this year has not made encouraging reading so far. But although faintly depressing, the string of profit losses were nothing if not predictable.
Of more interest have been the universal updates within company announcements regarding loan waivers. As far as financial fashions go they are this season’s ‘must have’.
When DryShips chairman and chief executive George Economou declared himself “delighted” to have reached an agreement with West LB earlier this week, it was probably something of an understatement. Without these “constructive discussions” with banks, he and many others who have managed to negotiate similar waivers would be facing foreclosure on their ships.
As far as the banks are concerned squeezing a bit more cash out of Mr Economou and his ilk is still far more preferable than actually having to repossess any vessels.
While there are undoubtedly some talented bankers out there, few are willing to put their expertise as a ship operator to the test — particularly when their clients have done a very able job of explaining just how tough it is right now.
So far the stand-off is holding, but however delighted everyone is with the current rash of sticking plaster deals, it is clear this situation cannot last forever.
Turning a blind eye to loan covenant breaches is one thing, but the build up in problem loans cannot be put off forever.
