Investors in dry bulk shipping companies could face a new round of financial blows after Excel Maritime, one of the highest profile, announced it planned to seek bankruptcy protection and others warned about their financial strength.

Excel, listed in New York but based in Athens, announced that it planned to ask creditors to support a pre-packaged bankruptcy filing that would leave Gabriel Panayotides, chairman, in control of the post-restructured company.

Excel’s announcement on June 11 came as several other listed dry bulk companies – which transport coal, iron ore and other bulk commodities – warned that they could face problems meeting the terms of their loan agreements.

Korea’s biggest dry bulk shipowner, STX Pan Ocean, sought bankruptcy protection on June 7.

Earnings for dry bulk ships continue to be too low to cover many companies’ operating costs. Vessels are suffering partly from a slowdown in the rapid growth in demand for dry bulk goods but principally from the flood on to the market of new ships ordered during the industry’s boom from 2002 to 2008.

Erik Stavseth, an analyst at Oslo-based Arctic Securities, said rates had been at best only covering operating costs since the start of the year. Average spot rates for a Capesize ship – the largest type – were $6,976 on Friday, below the roughly $10,000 operating cost.

“There’s none making money and no ability to pay the banks what they owe them,” Mr Stavseth said.

Two New York-based listed companies – Genco Shipping, whose chief executive is the shipping tycoon Peter Georgiopoulos, and Eagle Bulk Shipping – have both shown signs of distress.

On May 1, Genco announced it was reclassifying all of its borrowing as short-term because it might not be able to comply with the terms of its loan covenants over the coming year. Eagle Bulk told investors in April that, while it expected to be able to comply with its covenants over the remainder of 2013, if rates did not improve it could be in breach by March next year.

Banks have largely tolerated shipowners’ covenant breaches since the financial crisis but Mr Stavseth said cases such as Excel’s suggested they were losing patience. “The banks are getting a little bit tired, it seems,” he said.

People close to both Genco and Eagle Bulk stressed that they remained within the terms of their banking covenants. Doug Mavrinac, an analyst for Jefferies, the investment bank, said after Genco’s debt reclassification that a successful restructuring of its debt remained a “significant possibility”.

However, Lambros Papaeconomou, an independent shipping analyst, said it was “long overdue” for many financially troubled shipping companies to restructure their obligations.

Excel Maritime’s announcement said it had reached agreement with a committee of its senior lenders on a restructuring proposal and would seek other creditors’ approval. Under the plan, which will wipe out other shareholders, Mr Panayotides plans to buy 60 per cent of the shares in the restructured company and retain control.

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