TEU hatches buyback

Box Ships of Greece turned heads on Wall Street Monday after announcing plans to repurchase up to $5m worth of its own shares.

The New York-quoted operator of nine containerships shed light on the campaign in its first-quarter earnings report.

“The board of directors has authorized an amount of up to $5m to be used to buy back common shares in the open market over the next twelve months due to the ongoing weakness in our common share price,” said chief executive Michael Bodouroglou.

A leading equity analyst applauded the development when contacted by TradeWinds but admitted the move came as a surprise since Box Ships recently launched a campaign to preserve liquidity in response to persistent turbulence in the containership space.

The same individual pointed out that the company has not yet regained compliance with a loan covenant that is subject to an expired waiver but acknowledged negotiations between management and the owner’s lenders are already underway.

While Box Ships is confident that proceeds from a recent fundraiser and earnings generated by its containerships are sufficient to keep it afloat in the foreseeable future a second industry observer contacted by TradeWinds expressed concerns about liquidity.

The Connecticut-based researcher, who tracks over a dozen shipping stocks but doesn’t formally follow Box Ships, said he was “troubled” by the operator’s latest earnings release, in which it reported a net loss of $1.5m for three months to 31 March 2014.

The analyst pointed out that the company carded a $4m profit in the first-quarter of 2013 and noted the adjusted result, which amounted $0.01 in lost earnings per share (EPS), was far worse than many forecasters were expecting.

According to information contained in a report issued by Omar Nokta of Global Hunter Securities, a US investment bank that has worked with Box Ships on more than one occasion within the last 12 months, Wall Street had anticipated a gain of $0.07.