Ocean Shipping Company Costamare Falls After IPO

By LYNN COWAN

Marine shipping company Costamare Inc. shares lost ground on their first day of trading Thursday.

The company had cut the offering price ahead of the listing.
Costamare's stock opened at $12 a share on the New York Stock Exchange, flat with its initial public offering price. It sold 13.3 million shares at a level below its $15 to $17 range. In 4 p.m. composite trading, shares fell 15 cents, or 1.3%, to $11.85.

Headquartered in Greece, Costamare operates a fleet of 41 container ships, which carry cargo in individual containers that can later be attached to trains or trucks.

Its offering follows the debut of container leasing company SeaCube Container Leasing Ltd. last week, which also priced below its expected range. SeaCube rose 10% on its first day and has since added to its gains.

Like SeaCube's industry, Costamare's marine shipping business is highly sensitive to global economic conditions, and the company's fleet fluctuations reflect that. Costamare grew from 21 ships in 2000 to a peak of 53 in 2008, and has since decreased its size to 41 in response to market conditions. Its revenue grew until 2009, when it declined 6%, and it fell a further 14% in the first half of 2010; in both cases the decline was because of the lower average number of vessels in its fleet. Net income has bounced around in recent years. It rose in 2009 but fell 35% in the first half of this year.

Now, the company is tapping the IPO market to expand and upgrade its fleet with newer ships, on the premise that vessel prices remain below their 10-year historical averages even though the charter market for container ships has improved this year. The company in September entered agreements to acquire a total of seven new and secondhand container ships, and has lined up a loan conditioned upon the company completing its IPO.

Although current container ship charter rates remain low compared with highs seen in 2005, the company says in its prospectus that there are initial signs of recovery; time charter daily rates nearly doubled in the first nine months of 2010 compared with 2009. Its ships had a utilization rate of 99.8% in the first half of the year, with very few unscheduled off-hire days.

The company plans a dividend of $1 annually, which yields 8.3% at the IPO price.
Morgan Stanley and Bank of America-Merrill Lynch managed Costamare's offering

Write to Lynn Cowan at lynn.cowan@dowjones.com

This is an extract from http://online.wsj.com/article/SB10001424052748704805204575594712500683670.html