May 12, 2005

S&P takes Genmar off CreditWatch

Standard & Poor's Ratings Services yesterday affirmed its ratings, including the "BB" corporate credit rating, on New York based General Maritime Corp. and removed all ratings from CreditWatch, saying "the rating outlook is stable."

General Maritime had been placed on CreditWatch with negative impliactions on January 27, 2005, following announcement of a new dividend policy, under which shareholders would receive a significant proportion of the company's cash flow.

Yesterday's affirmation of the corporate credit rating "reflects General Maritime's improved cash flow generation and significant debt reduction, tempered by the company's adoption of an aggressive dividend policy," said Standard & Poor's credit analyst Ken Farer.

Standard & Poor's says General Maritime had $457 million of lease-adjusted debt at March 31, 2005.

Standard & Poor's says its ratings on the company reflect "its significant, but managed, exposure to the volatile tanker spot markets, an aggressive growth and dividend strategy, and participation in the high-risk bulk ocean shipping industry. These negative factors are partly offset by General Maritime's competitive position as one of the largest operators of Aframax and Suezmax vessels, its success in reducing its debt leverage, and satisfactory access to liquidity."

Standard & Poor's says the oil tanker shipping industry--especially the larger vessel classes--is seen as having a very high risk profile as a result of volatility in freight rates and asset values.

While shipping companies may utilize time charter contracts to counter rate volatility, Standard & Poor's notes that General Maritime's exposure to the spot market is significant, with only 15 percent of its 2004 revenues generated from vessels operating on time charters.

General Maritime operates 43 oceangoing vessels--26 Aframax tankers and 17 Suezmax vessels--with four additional vessels on order.

"The company's fleet size is substantial," says Standard & Poor's, "and its fleet is approximately the same average age as the global fleet. Since the company's founding by Peter C. Georgiopoulos, chairman and CEO, who remains the driving force behind the company, General Maritime has expanded mainly through acquiring vessels, rather than ordering new ships. Recent acquisitions include the 19 vessels from Metrostar Management Corp. in May 2003 for $525 million and five vessels from Soponata S.A. in March 2004 for $247 million, plus the assumption of $168 million of future vessel commitments on four additional vessels."

"General Maritime is expected to continue reporting strong revenue, earnings, and cash flow measures due to the current favorable tanker rate environment and low debt levels," says Standard & Poors. "An outlook revision to negative is not likely, even if the tanker market weakens somewhat, as credit measures should remain appropriate for the current rating. However, if the company adopts a more aggressive financial profile or does not reduce its leverage following a large acquisition, the outlook could be revised to negative. Standard & Poor's believes an outlook revision to positive is unlikely in the near term due to the company's aggressive dividend policy and growth aspirations."


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