At a time, where analysts have estimated that dry bulk shipping rates would only recover by the middle of next year, Globus Martime Limited (OTCMKTS:GLBS) managed to generate far more market movement than anyone would have expected.
Within a week, analysts have been reminded that the market cannot always be predicted.
After nearly four months of trading within a close range of $0.9 and $1.05, the stock surged to $1.88 and fell back to $1.1, leaving early investors with almost 100% return on their investment.
Take a look at the stock’s price action:
For our readers, who are not so familiar with Globus Maritime Inc, here is a quick overview.
The company is an integrated dry bulk shipping company that company provides international marine transportation services for iron ore, coal, grain, steel products, cement, alumina, and other dry bulk cargoes.
Globus owns and operates a fleet of five dry bulk carriers which are managed by Globus Ship management Corp, the company’s internal commercial and technical management group. As at 2017, all Globus vessels were operating on short-term time charters.
The company’s stated objective is to grow its fleet through selective acquisitions of modern vessels that will yield a competitive return on equity and will be accretive to both earnings and cash flow based on anticipated market shipping rates.
In October, the company announced that it had signed a share and warrant purchase agreement providing for the issuance, for gross proceeds of $2.5 million, of an aggregate of 2.5 million shares of common stock, par value $0.004 per share and warrants to purchase 12.5 million shares of common stock at a price of $1.60 per share, in a private placement to a private investor. The company intends to use the proceeds from the sale of common shares and warrants for general corporate purposes and working capital.
Mr. Georgios Feidakis, Globus’s Chairman explained that the management was pleased by the demonstration of confidence in the company from their new investor, United Capital Investments Corp., led by Mr. Victor Restis. Mr. Restis has significant experience in shipping and currently runs a fleet of approximately 40 vessels. He outlined that they management would continue to be committed to customers and shareholders and anticipate that the transaction will have a positive impact on the company’s growth.
In a recent announcement by the firm, it released the results of its annual meeting of shareholders held earlier today in Glyfada, Greece. Some of the proposals were approved and adopted at the meeting were the election of Mr. Athanasios Feidakis and Mr. Ioannis Kazantzidis as Class I directors of the Company to serve until the 2020 Annual Meeting of Shareholders; and the appointment of Ernst & Young (Hellas) Certified Auditors Accountants S.A., as the Company’s independent auditors for the fiscal year ending December, 2017.
In the first half of 2017, total revenues increased by roughly 63% compared to the same period last year, the firm was also able to reduce its debt by about 30% again compared to the first half of last year.
In February, Globus Maritime Limited successfully completed a private placement transaction with a group of investors encompassing a $5 million share purchase of Company’s common shares plus warrants which was a boost for its statement of financial position at a healthier level after almost two years.
The company CEO highlighted that the recovery of benchmark dry bulk rates in the last few months has allowed the firm the freedom to hire out its vessels at significantly higher rates than the previous year.
As at late 2016 management had decided to increase spending on the general maintenance of the fleet, in order to better serve clients and improve utilization rates. This led to an initial increase in costs but the costs have gradually normalized and dropped, as reflected in its financial report
Interest expense and finance costs reached $1.0 million during the first half of 2017 compared to $1.5 during the same period in 2016. The decrease is mainly attributed to the conversion of $20 million of outstanding principal of two loans to 20 million shares, as described in the Share and Warrant Purchase Agreement that the firm entered in February 2017.
Total comprehensive loss for the second quarter of the year 2017 amounted to $1.4 million or $0.05 basic loss per share based on 27.6 million weighted average number of shares, compared to total comprehensive loss of $2.9 million for the same period last year or $1.12 basic loss per share based on 2.6 million weighted average number of shares.
Globus Inc has shown a commitment to grow and its management has already begun to pursue this goal with some results. Expectation is high that positive results will be flowing in by mid -2018. Overall, we see GLBS as a prime turnaround play.
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Disclosure: We have no position in GLBS and have not been compensated for this article.