Exhibit 99.1
CONTACT:
Jeffrey D. Pribor
Chief Financial Officer
General Maritime Corporation
(212) 763-5680
GENERAL MARITIME CORPORATION
INITIATES CASH DIVIDEND POLICY
Company to Distribute Quarterly Dividend Based on
EBITDA After Interest Expense and Reserves
Maintains Significant Financial Strength
and Flexibility for Future Growth
New York, New York, January 26, 2005 - General Maritime Corporation (NYSE:
GMR) announced today that its Board of Directors has initiated a cash
dividend policy. Under the policy, the Company plans to declare quarterly
dividends to shareholders in April, July, October and February of each year
based on its EBITDA after interest expense and reserves, as established by
the Board of Directors. The Company estimates that if it had adopted this
policy as of January 1, 2004, subject to the limitations of the restricted
payment covenant in the outstanding bond indenture, the Company would have
been able to pay $ 5.42 per share with respect to the nine month period ended
September 30, 2004. This equates to an annualized 18% yield based on the
closing price of General Maritime's common stock as of January 21, 2005.
General Maritime expects to declare the initial quarterly dividend following
the announcement of its first quarter 2005 results during the fourth week of
April. No dividend will be declared with respect to the fourth quarter of
2004.
Commenting on the dividend policy, General Maritime Corporation's Chairman,
Chief Executive Officer and President, Peter C. Georgiopoulos stated, "We are
pleased to have implemented a policy which we believe will unlock significant
value for shareholders while providing for future growth. The dividend
policy provides shareholders with the unique opportunity to directly benefit
from General Maritime's significant earnings power as the Company continues
to seek to further consolidate the mid-sized tanker industry. Building on
our past success, we intend to maintain a disciplined approach to managing
General Maritime's capital structure and continue making accretive
acquisitions aimed at providing enduring value to the Company and its
shareholders."
Reserves for Maintenance and Renewal of Fleet
---------------------------------------------
To ensure that General Maritime's capital assets are properly maintained and
continuously renewed, the Board of Directors currently intends to establish
reserves for maintenance and renewal capital expenditures. As defined by
the dividend policy, maintenance capital expenditures would include normal
maintenance and drydocking of existing vessels. Renewal capital
expenditures would include any vessel acquisitions for the indefinite renewal
of the fleet. The Board of Directors expects to review the reserves for
maintenance and renewal capital expenditures from time to time and at least
annually, taking into account the remaining useful life and asset value of
the fleet, among other factors. The Company currently expects that its
estimated maintenance and renewal capital expenditure reserve will be $100
million in 2005. This is comprised of approximately $30 million for the
provision of normal maintenance and drydocking costs associated with all of
the Company's vessels, and approximately $70 million related to fleet
renewal.
Jeffrey D. Pribor, General Maritime Corporation's Chief Financial Officer,
commented, "The initiation of the dividend policy is the culmination of a
comprehensive analysis aimed at distributing cash to shareholders and
preserving the Company's ability to both renew and grow its fleet. In
addition to the reserves that will be set aside for fleet renewal, the
Company's $600 million revolver combined with its 33% net debt to capital
ratio as of 12/31/04 provides General Maritime with significant financial
flexibility to continue to grow its fleet."
Bond Indenture and Other Matters
--------------------------------
General Maritime's outstanding bond indenture generally allows the Company to
pay dividends and other "restricted payments" up to an amount equal to no
less then 50% of the cumulative net income earned since the first quarter of
2003 plus an additional $25 million. General Maritime is currently exploring
various options for ensuring its ability to pay dividends as defined by the
new dividend policy, and will review available equity and debt financing
alternatives from time to time. Any dividends paid will be subject to the
consent of the Company's lenders under its existing secured credit facilities
and applicable provisions of Marshall Islands law.
Estimated Pro-Forma 2004 Payout
-------------------------------
The dividend policy is aimed at providing shareholders with the opportunity
to benefit from the Company's significant size and earnings power. The
Company estimates that if it had adopted this policy as of January 1, 2004,
and if the restricted payment covenant in the outstanding bond indenture had
not limited the ability to pay dividends, General Maritime would have been
able to pay $ 5.42 per share with respect to the nine month period ended
September 30, 2004. This equates to an annualized 18% yield based on the
closing price of General Maritime's common stock as of January 21, 2005.
The table below details the amounts which management estimates would have
been available for the payment of dividends for each of the first three
quarters of 2004.
Three months ended (4)
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March 31, 2004 June 30, 2004 September 30, 2004
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(Dollars in millions, except per share amounts)
EBITDA (1) $ 113.7 $ 78.0 $ 89.1
Interest expense (9.7) (9.9) (9.7)
Assumed quarterly fleet maintenance
and renewal reserve (2) (10.9) (12.4) (11.8)
Reserve for drydocking (4.0) (4.0) (4.0)
--------- -------- --------
Available for dividends $ 89.1 $ 51.7 $ 63.6
--------- -------- --------
Available for Dividends per share (3) $ 2.36 $ 1.37 $ 1.69
EBITDA Reconciliation
Net Income $ 78.3 $ 41.7 $ 54.6
Net Interest expense 9.7 9.8 9.7
Depreciation & Amortization 26.5 26.5 24.8
--------- -------- --------
EBITDA $ 113.7 $ 78.0 $ 89.1
--------- -------- --------
Notes:
- ------
(1) EBITDA represents net income plus net interest expense and depreciation
and amortization. EBITDA is included because it is used by management and
certain investors as a measure of operating performance. EBITDA is used by
analysts in the shipping industry as a common performance measure to
compare results across peers. Management of the Company uses EBITDA as a
performance measure in consolidating monthly internal financial statements
and is presented for review at our board meetings. The Company believes
that EBITDA is useful to investors as the shipping industry is capital
intensive which often brings significant cost of financing. EBITDA is not
an item recognized by GAAP, and should not be considered as an alternative
to net income, operating income or any other indicator of a company's
operating performance required by GAAP. The definition of EBITDA used here
may not be comparable to that used by other companies.
(2) Assumes reserves were established by the Board of Directors based upon the
Company's existing fleet at 12/31/03. This reserve is substantially less
then the expected reserve for 2005 due to vessel values.
(3) Based on number of shares of Common Stock outstanding at the end of each
quarter.
(4) Assumes the Company obtained any necessary waivers or consents with
respect to its credit facility and amended or otherwise obtained relief
from the terms of the indenture for its outstanding Senior Notes. Also
assumes all debt amortization was refinanced.
Federal Tax Rule
----------------
General Maritime believes that under current law, dividend payments from
earnings and profits will constitute "qualified dividend income" and will be
subject to a 15% United States federal income tax rate with respect to
individual shareholders. Distributions in excess of the Company's earnings
and profits will be treated first as a non-taxable return of capital, to the
extent of a United States stockholder's tax basis in its common stock on a
dollar-for-dollar basis, and thereafter as a capital gain. As an offshore
Marshall Island Company there will be no withholding tax for U.S. or foreign
investors.
Mr. Georgiopoulos concluded, "The initiation of this unique dividend policy
is another milestone in the Company's history. General Maritime remains well
positioned to take advantage of its sizeable fleet and benefit from both the
current strong rate environment and positive long-term industry
fundamentals.
Conference Call Announcement
----------------------------
General Maritime Corporation will hold a conference call on Thursday, January
27, 2005 at 8:30 a.m. Eastern Time to discuss the initiation of its dividend
policy. The conference call and a presentation will be simultaneously
webcast and will be available on the Company's website,
www.GeneralMaritimeCorp.com. To access the conference call, dial (800)
638-5439 for U.S. callers and (617) 614-3945 for non U.S. callers and enter
passcode 67661087 or ask for the General Maritime Corporation conference
call. A replay of the conference call can also be accessed until February
10, 2005 by dialing (888) 286-8010 for U.S. callers and (617) 801-6888 for
non-U.S. callers, and entering the passcode 53624714. The Company also
intends to place additional materials relating to this policy on its website
prior to the conference call.
About General Maritime Corporation
----------------------------------
General Maritime Corporation is a provider of international seaborne crude
oil transportation services principally within the Atlantic basin which
includes ports in the Caribbean, South and Central America, the United
States, West Africa, the Mediterranean, Europe and the North Sea. The
Company also currently operates tankers in other regions including the Black
Sea and Far East. General Maritime Corporation currently owns and operates a
fleet of 47 tankers - 26 Aframax, 17 Suezmax tankers and 4 Suezmax
newbuilding contracts - making it the second largest mid-sized tanker company
in the world, with a carrying capacity of approximately 5.9 million dwt.
Other Information
-----------------
The actual declaration of future cash dividends, and the establishment of
record and payment dates, is subject to final determination by the Board of
Directors each quarter after its review of the Company's financial
performance. There can be no assurance that the Company's future dividends
will in fact be equal or similar to the amounts described in this press
release. The Company's dividend policy may be changed at any time, and from
time to time by the Board of Directors. For further information, please see
Item 8.01 of the Company's Current Report on Form 8-K, filed with the
Securities and Exchange Commission on the date hereof.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995
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This press release contains forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on management's current
expectations and observations. Included among the factors that, in the
Company's view, could cause actual results to differ materially from the
forward looking statements contained in this press release are the following:
changes in demand; a material decline or prolonged weakness in rates in the
tanker market; changes in production of or demand for oil and petroleum
products, generally or in particular regions; greater than anticipated levels
of tanker newbuilding orders or lower than anticipated rates of tanker
scrapping; changes in rules and regulations applicable to the tanker
industry, including, without limitation, legislation adopted by international
organizations such as the International Maritime Organization and the
European Union or by individual countries; actions taken by regulatory
authorities; changes in trading patterns significantly impacting overall
tanker tonnage requirements; changes in the typical seasonal variations in
tanker charter rates; changes in the cost of other modes of oil
transportation; changes in oil transportation technology; increases in costs
including without limitation: crew wages, insurance, provisions, repairs and
maintenance; changes in general domestic and international political
conditions; changes in the condition of the Company's vessels or applicable
maintenance or regulatory standards (which may affect, among other things,
the Company's anticipated drydocking or maintenance and repair costs);
consents by charterers and ship builders to assignments of contracts and
other factors listed from time to time in the Company's filings with the
Securities and Exchange Commission, including, without limitation, its Annual
Report on Form 10-K for the year ended December 31, 2003 and its subsequent
reports on Form 10-Q and Form 8-K.